1、 Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Continental Europe View HSBC Global Investment Research at:https:/ HSBCGlobalInvestmentResearchPodcasts

2、|ListentoourinsightsFindout more Capital allocation:Mag 7s USD1trn+cash firepower goes to capex first,but buybacks are second in size We see room for more capex at Apple to catch up in AI and medium-term opportunities for share buyback at NVIDIA Retain Buy ratings on Microsoft,Meta,and Amazon;Hold o

3、n Apple and NVIDIA;Reduce on Tesla Capital allocation priorities:investment and buybacks A business can use the cash it generates to develop and defend activity,repay debt,reward investors,or a combination of these.This is a dynamic task with different time horizons and risk.We look at capital alloc

4、ation amongst Mag 7 and their cUSD900bn cash flows from operation in 2025 and their cUSD200bn of net cash at hand(June 2025).Capex is the largest Mag 7 capital allocation pod(45%,2025 HSBCe at USD414bn),outpacing share buybacks since 2024 due to the surge in AI-related investment.Still,we make the p

5、oint that buybacks represent a significant portion of allocation(26%,USD236bn in 2025e),well above share-based compensation(USD88bn).Amongst the Mag 7,all but Amazon have a net cash position and,except Tesla,positive cash flows.But we flag the different ways they spend cash.Amazon,Microsoft,and Tesl

6、a focus on capex,Apple and NVIDIA on share buybacks,and Alphabet(not rated)and Meta on a mix of capex and buybacks.The embarrassment of riches:what could change We expect the higher total addressable market(AI,Cloud,EV,etc.)to support strong cash generation in the coming years.Some of the Mag 7 coul