Letter

Hayden Capital's Q2 2026 letter, on the "SaaS-pocalypse" and returns on reinvestment

Fred Liu · 2026

Applies one simple equation, earnings growth as return on capital times reinvestment, to the biggest question of 2026: whether AI capital spending will earn its cost.

• Capital allocation
• Artificial intelligence
• Valuation

1 idea from this letter

• FrameworkCapital allocation located

  Earnings growth is return on capital times reinvestment, which is the AI spending question

  Spending is only growth if the return on it exceeds the cost; estimate the return under several assumptions before admiring the spend.

  Any capital-intensive growth story, the AI capital expenditure debate, and valuation of a company reinvesting most of its cash flow.