Decoding RaymondsIndex: The Momentum Alignment Index (MAI), Explained

Every quarter, a company tells you two stories about itself. One is the income statement — revenue, operating profit, earnings per share. The other is the cash flow statement — how much money actually moved. Most of the time the two stories rhyme. The Momentum Alignment Index (MAI) exists for the moments when they stop rhyming.

What MAI measures. MAI is one of the four RaymondsIndex leading signals, and it is deliberately narrow. It tracks the alignment between two rates of change: revenue-growth momentum and capital-expenditure-growth momentum. In a healthy business, the two tend to move in the same direction over a multi-quarter window — you invest, and with a lag, revenue follows; or revenue slows, and prudent management slows investment. When those two curves diverge and stay diverged, MAI reads a mismatch. Sustained mismatch is one of the classic conditions under which reported earnings and economic reality quietly separate — the technical definition of an earnings-quality problem, and sometimes of outright manipulation.

This week's live illustration. You don't need a small-cap fraud to see the mechanism. Look at the largest, most-scrutinized companies on earth. The big-five hyperscalers plan roughly $725 billion of AI capex in 2026, up about 77% from $410 billion a year earlier. Capex has climbed to around 86% of EBITDA, from roughly 52% twelve months ago. Amazon's trailing free cash flow fell from about $26 billion to $1.2 billion; Microsoft's is down 22%, Alphabet's down 38%. And yet reported earnings keep rising — because capex hits the income statement slowly, through depreciation, rather than all at once. In 2023 Alphabet extended the useful life of its servers from four years to six, which lifted reported earnings by roughly $3.0 billion in that fiscal year alone, without changing a single dollar of underlying economics.

Read that sequence through MAI. Capex momentum has exploded. Revenue momentum, while real, has not kept pace with the depreciation wave that $725 billion in annual spending creates. And the gap between reported profit and real cash is being partly reconciled by an accounting estimate — the useful-life assumption. None of this is illegal, and these are profitable, world-class businesses. But it is precisely the shape of divergence MAI is designed to notice: reported momentum and cash momentum pulling apart, with an accounting lever sitting in the middle.

The Korea parallel. The same shape appears far more dangerously in small caps. Since July 1, Korea's tightened delisting regime has narrowed the runway for companies that survive on the gap between a growth story and the cash to fund it — market commentary has floated 150 to 220 KOSDAQ names in the potential-exit zone. RaymondsIndex applies the MAI lens across more than 3,000 Korean listed names, looking for the same divergence long before an auditor's opinion or a delisting notice makes it official.

The academic frame. This is not a novel idea; it is a measurable one. Sloan's foundational accruals-anomaly work (Sloan, 1996) showed that earnings backed by cash persist, while earnings backed by accruals reverse — and that the market is slow to tell the difference. Dechow, Ge and Schrand (2010) later catalogued how estimate-based levers, including depreciation assumptions, systematically shape earnings quality. MAI operationalizes that literature as a forward-looking momentum signal rather than a backward-looking audit finding.

What it means for you. Headline EPS is the story a company chooses to tell. The alignment between investment and cash is the story it can't easily edit. If you only watch one, watch the second. Which of the two stories are you actually pricing when you buy a stock?

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