Big Tech is committing enormous capital to AI infrastructure, creating strong demand for chips, memory, networking, power and data centres. The advantage of suppliers is that they can benefit regardless of whether Alphabet, Meta, Microsoft or Amazon ultimately wins the AI platform race.
The spenders face a tougher test. Investors increasingly want evidence that huge AI CapEx translates into sustainable revenue, margins and free cash flow. Strong growth alone may no longer justify ever-rising investment.
Among the spenders, Alphabet would still be my favourite because its Cloud business provides a clearer path towards AI monetisation.
My positioning: AI sellers first, Alphabet second. The key risk is a slowdown in hyperscaler CapEx, which could quickly hit supplier valuations.
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