A historic wave of tech CapEx is transforming the entire market: The CapEx-to-depreciation ratio of the S&P 500 Information Technology sector has surged to ~1.94, the highest in at least 20 years. This metric measures how much companies invest in new assets relative to the rate at which their existing assets are depreciating. The ratio has surged +76% since 2021, the fastest pace since the post-2008 recovery. It now stands +21% above the 2018 peak of ~1.60. By comparison, this metric for the S&P Midcap 400 index has fallen -23% over the last 2 years, to ~1.38, near the lowest in 15 years. Big tech AI investment is exploding.(The Kobeissi Letter)