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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
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New West Capital analyzes whether the Magnificent Seven's trillion-dollar AI infrastructure spending spree is creating or destroying shareholder value by measuring each company's return on invested capital against its cost of capital. The analysis reveals three distinct groups. Nvidia and Apple represent the winners: Nvidia as the AI buildout's primary supplier has seen returns multiply to 84% while Apple has chosen a capital-light approach, with both avoiding the economics squeeze. Microsoft, Meta, and Alphabet form the middle tier as archetypal builders whose returns have compressed from the low forties to mid-twenties, yet still earn 2.5 to 3 times their cost of capital, shifting from extraordinary to merely excellent. Amazon and Tesla represent the strugglers, with Amazon barely above its hurdle rate and Tesla now destroying value with returns below its cost of capital. The analysis also examines share count management, finding that the five companies clearing their hurdle with room to spare have all shrunk share counts, while the two strugglers have allowed significant dilution. The conclusion: capex spending itself is not the risk, but rather spending that fails to earn above the cost of capital.
The trillion-dollar AI capital expenditure wave across the Magnificent Seven is not a uniform story of value creation or destruction, but rather three distinct narratives based on returns on invested capital versus cost of capital: suppliers like Nvidia and capital-light players like Apple are thriving, builders like Microsoft, Meta, and Alphabet are compressing but still excellent, while Amazon and Tesla struggle at or below their hurdle rates.
The analysis concludes that the dispersion within the Magnificent Seven is widening as AI spending continues, creating opportunities for long-term investors to distinguish between companies buying growth versus those merely buying capacity. The returns on invested capital and share count management separate durable compounders from capital destroyers, with most of the group remaining among the most productive deployers of capital even at the peak of the AI build cycle.
As of Aug 31, 2026
Kyle Joseph Tushaus, CFA, serves as Managing General Partner and founder of New West Capital, bringing extensive experience in engineering and acquisitions for family offices. He holds academic credentials in Mechanical Engineering and Finance from the University of Kansas and is a CFA charterholder. His professional background includes leadership roles at Schlesinger Companies as VP of Acquisitions and Asset Management, Norcap as VP of Acquisitions, and General Electric as Manager. Tushaus passed the Series 65 examination and maintains clean regulatory records with no disclosure events. He manages investments modeled after the original Buffett Partnership structure with a focus on long-term quality investing.
New West Capital embraces a Quality Investing philosophy focused on investing in companies with superior business characteristics, combining financial strength and qualitative factors like management capabilities. They integrate Value Investing principles by targeting Quality businesses priced below intrinsic value, aiming for attractive companies at great prices. Their investment approach emphasizes lifelong learning over static methodologies, underpinned by productive capital allocation derived from Austrian Economics. They reject the notion of perfectly efficient markets, viewing price volatility discrepancies as evidence of behavioral influence and considering this a constant arbitrage opportunity. The firm positions temperament as a competitive advantage in their investment process.
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