Amazon's cloud build-out cost something like $300 billion over a decade and returned about 17%, on Charles Kantor's numbers. He expects the current spending wave to earn the same rate on more than three times the capital.
Investors spent this earnings season worrying that the largest companies in the index have stopped producing free cash flow and started borrowing to spend. Kantor said the worry is aimed at the wrong number.
"I mean, I find the skepticism around the negative free cash flow for the large companies kind of silly, to be honest, because the fundamental question is how, you know, what's the rate of return on investing? Not do I have negative free cash flow."
Kantor is a senior portfolio manager at Neuberger Berman and a returning guest on the show — Mike Santoli opened by reading Kantor's own description of the spending wave back to him from a previous appearance.
I listened to the full segment so you can skip it.
Here are the 5 takeaways that matter.
👤 Guest: Charles Kantor, Senior Portfolio Manager at Neuberger Berman
🎙️ Host: Mike Santoli, CNBC's Senior Markets Commentator
📰 Published: 9 September 2026 on CNBC
🔴 CNBC | ⏱️ 4 min
Key Takeaways
The right question about the capital spending is the return on it, not whether free cash flow has gone negative
Investors applauded the same companies for buying back stock and dislike them investing
Amazon's cloud spending is his template: roughly $300 billion, and returns that penciled out at 17%
He expects a comparable rate on what he says will be north of $1 trillion
Credibility is now a screening criterion: the biggest spenders have earned the right to be believed
The market is paying for momentum and not for quality, which he says makes quality the attractive entry point
He would take the other side of the bond market's inflation view, because oil and tariffs are supply shocks rather than lasting inflation
1. Negative Free Cash Flow
Santoli opened on the paradox: the companies investors relied on for heavy free cash flow, no borrowing and steady buybacks — the largest technology names — are now leveraging up and spending, which should have made the remaining high-quality balance sheets more expensive. It has not.
Kantor said the complaint is misdirected: "I mean, I find the skepticism around the negative free cash flow for the large companies kind of silly, to be honest, because the fundamental question is how, you know, what's the rate of return on investing? Not do I have negative free cash flow."
On the inconsistency in how investors treat the same cash: "They bought back their stock and now they don't seem to like it when they're investing in their business."
He said the size of the spending is the part investors cannot process, and that the companies are not helping: "I think it's really hard for investors to wrap their heads around just the magnitude of the investments. And the companies themselves aren't revealing a lot."
He said that silence makes sense to him, because the companies are in a competitive race and planning for the future
His firm's own work concludes that if an investor can accept a long wait before the returns show up, they are "going to be very attractive"
2. Momentum Over Quality
The same answer carried into what the market is actually paying for right now, which Kantor said is the opposite of what he owns.
"But of course, as you highlight, you know, the market loves risk right now. It loves momentum. It doesn't love quality," he said
His expectation is a rotation back toward companies protected from competition: "And I think at some point folks are going to come back to, to the quality factors, to the businesses that are moated and say, these are, you know, these are really attractive entry points."
On what the market costs today, measured against the results companies just reported: "And I think you see that whether it's in the equal weighted index or in the market as a whole, I just don't think valuations are demanding relative to the earnings season you just went through."
The equal-weighted index gives every company the same share, so it reflects the average stock rather than the largest few
3. Who Gets to Tell a Story
Santoli put Kantor's own previous framing back to him and asked whether earnings season had changed his mind about it.
The host's summary of that framing: "I think the last time you were on you called this sort of, you know, the spend, spend, spend, trust us, it will pay off later storytelling, which is sort of derogatory in some ways." He added that it is still a leap of faith either way
Kantor's revised position is that the identity of the speaker is now part of the analysis: "I think it matters who the storytellers are and how much credibility they have in the bank."
"And I think when you look at the folks doing the largest capital spending today in the public markets, I think they've earned the right to tell their stories," he said
What that leaves for the investor is arithmetic rather than belief: "And it's our job to figure out, you know, do you get mid-teen type returns from these types of investments?"
4. The Amazon Comparison
Kantor's evidence for the whole position is a decade-old version of the same argument, and the same skepticism attached to it.
"For example, Amazon's a company we focus closely on, you know, you go back to 2014 or so, people were super skeptical about the billions of dollars they're going to invest in the cloud. You look back, those types of returns pencil out at 17%," he said
On the scale of the current version: "Our guess is these types of returns pencil out at the same level on gigantic amounts of more capital, right? That was probably a $300 billion investment." He said this one runs to "north of $1 trillion"
Santoli pointed out that the Amazon figure was spread over about a decade. Kantor said this one is too: "So it's three times more. But I think you're going to get similar levels of absolute levels of profits."
His caveat on his own optimism: "But we're in that season of everything's glass half full at the moment."
5. Bonds Read It as Secular
Asked whether the level of interest rates constrains the returns he is describing, Kantor answered with a call on the bond market instead.
"I think we're at a moment in time where both bonds and equities are attractive on a risk adjusted basis," he said
The disagreement he is expressing: "I think the bond market has this skepticism about the secular nature of inflation, whether it's because of oil prices or whether it's because of tariffs. To us, those are supply side shocks. The bond market reads that as secular. I would take the other side of that."
A supply shock raises prices once, when the shortage or the tariff hits; a lasting inflation problem is a repeating rise that gets built into wages and expectations. Kantor's claim is that oil and tariffs are the first kind and the bond market is pricing them as the second
Bonus Insights
The show's own setup for the segment cited a 12.5% gain for quality stocks since midyear, which Santoli used to ask whether the opportunity is moving to non-technology parts of the market
Kantor twice framed his own view as the consensus mood rather than a differentiated call, describing the market as being in a season where everything reads glass half full
Kantor's bottom line is that the largest companies' negative free cash flow is not the risk investors should be underwriting — the return on more than $1 trillion of spending is — and that on his firm's reading of Amazon's cloud build-out, that return is likely to land in the mid-teens.
Products, Companies & Tools Mentioned
Amazon (Kantor's template for the current spending wave: skepticism in 2014 about billions going into the cloud, and returns he says penciled out at 17%)
Neuberger Berman (Kantor's firm, where he runs money as a senior portfolio manager)
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