Topic

Technology

Capital allocation inside technology companies: capacity, cash, and return.

Technology · Sample

Northline is committing $4 billion to compute capacity. What does that actually mean?

The cash leaves as the assets are built. The expense does not arrive all at once. This is capital expenditure: cash exchanged for long-lived assets, then charged against earnings as those assets are used.

$4B commitment
Cash out
Long-lived assets
Depreciation
Return

9 min · 7 Oct 2026

Capital expenditure
Depreciation
Free cash flow

Concepts in this topic

Capital expenditureCash spent on a long-lived asset is not the same event as an expense. The cash leaves now. Profit records the cost as the asset is used.
DepreciationDepreciation allocates a cost the firm has already incurred. It is not a cash payment, and it is not an appraisal of what the asset would sell for.
Free cash flowFree cash flow is cash the business produces after the reinvestment required to maintain it. It is an analytical idea. It is not a single audited line.