Forget Nvidia: Why Samsung, TSMC, and Micron Just Generated 'More Free Cash Flow... Than Any Other Listed US Company'

Third-quarter financial data indicates that international semiconductor foundries and memory manufacturers surpassed all publicly traded U.S. corporations, including Nvidia Corp. (NASDAQ:NVDA), in free cash flow generation.

The Free Cash Flow Leaders

During episode 212 of the “Facts Versus Feelings” podcast, Chief Macro Strategist Sonu Varghese detailed the current distribution of capital within the artificial intelligence (AI) and semiconductor industries.

Varghese stated, “Three memory makers, right? Samsung, SK Hynix Inc. (NASDAQ:SKHY), and Micron, plus TSMC [Taiwan Semiconductor Manufacturing Company Limited (NYSE: TSM)], each generated more free cash flow in the third quarter than any other listed U.S. company, including Nvidia.”

This capital accumulation highlights the supply chain mechanics underlying current hardware investments. Varghese explained that when technology companies purchase processing units, “those actually include memory chips made by Micron and then you have also have Samsung and SK Hynix in the mix as well,” before Nvidia applies its own margin.

Capital Expenditure Shifts

The high free cash flow among memory manufacturers is driven by unprecedented capital expenditure from technology companies building out data centers.

Varghese noted that hyperscaler free cash flow is currently negative $40 billion and is “expected to stay negative through 2027.” Describing this dynamic, Varghese observed, “what’s happening is the buyer’s cash flow is going straight to the sellers.”

Overall spending by these buyers continues to scale up rapidly. Varghese stated that capital expenditure estimates for the major hyperscalers in 2027 have increased to $1.15 trillion, a figure he noted is up 94% from initial estimates.

When factoring in additional firms, Varghese noted that six hyperscalers are “expected to spend $1.4 trillion” in 2027, representing “almost 4% of GDP.”

Reinvestment by Memory Makers

While these memory manufacturers are currently generating high free cash flow, they are simultaneously directing funds back into infrastructure.

Varghese noted that “the capex for these memory makers… that’s doubled over the past year.” Looking forward, Varghese projects that aggregate free cash flow for chipmakers overall, specifically naming Nvidia, Micron Technology Inc. (NASDAQ:MU), Broadcom Inc. (NASDAQ:AVGO), and Applied Materials Inc. (NASDAQ:APLD), is “expected to climb to 150, 200 billion by the end of 2027.”

How Have These Stocks Performed?

Stocks	1-Month	6-Months	YTD	1-Year	5-Years
NVDA	-13.48%	4.14%	10.83%	4.03%	594.76%
MU	-19.63%	48.34%	199.60%	292.19%	1072.65%
APLD	-27.89%	-50.01%	-27.37%	-42.66%	-32.54%
AVGO	-8.38%	-20.26%	-4.04%	-5.63%	494.26%
TSM	-16.67%	0.79%	33.21%	37.66%	243.63%

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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