What it is
Capex, or Capital Expenditures, refers to the money a company spends to acquire, upgrade, and maintain long-term physical assets, such as buildings, machinery, vehicles, and technology infrastructure. These investments are crucial for a company's growth, efficiency, and ability to generate future revenue. Unlike operating expenses, which are consumed within a year, capex items are capitalized on the balance sheet and depreciated over their useful life.
Investors track capex as it reflects a company's investment in its future. High capex can signal growth initiatives or necessary maintenance, but it also reduces free cash flow, which is cash available to shareholders. Companies with declining capex might be mature or facing financial constraints, potentially signaling slower growth. In financial news, analysts often discuss capex plans during earnings calls to understand future revenue potential and cash flow implications.
Why it matters
Capex shows how much a company is investing in its future growth and efficiency, directly impacting future earnings and free cash flow. This affects your investment's potential.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice