Strategists at JPMorgan have stated that market concerns about the funding supply for AI infrastructure are somewhat overdone, and that with investors having already significantly reduced their positions, the recent decline in AI-related stocks may be running out of steam.
A team led by Nikolaos Panigirtzoglou said that hedge funds and trend-following investors, among others, have largely closed out their previously heavy semiconductor positions. Their broad equity positioning gauge has also fallen notably from its mid-September peak, which could limit further downside.
The report noted that the technology sector has generated cash flow this year that exceeds its capital expenditure by roughly $400 billion.
The report mentioned that listed technology companies plan to spend a combined total of about $1.8 trillion on investment and research and development this year, with smaller AI infrastructure players accounting for only $80 billion of that amount; if financing difficulties force smaller companies to scale back their spending, larger companies can take on that portion of the expenditure.
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