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Automatically translated version. May contain inaccuracies compared to the original.
Investors are increasingly confident about the scale of spending on artificial intelligence and are now looking for companies that can turn this boom into stable profits. The focus has shifted not only to chipmakers but also to the largest cloud platforms and specialized compute power operators.
Investors changing their view on AI stocks
The latest round of corporate reporting shifted the main question around artificial intelligence, Reuters reports. If previously investors mainly tried to understand whether the enormous costs of AI infrastructure by tech giants would pay off, now they are looking for specific future winners.
Microsoft and Amazon reports showed that demand for AI infrastructure remains high. Growth of the cloud business is speeding up, and the bottleneck of computing power remains.
Because of this, large investors continue to hold sizable positions in the semiconductor sector, despite the July sell-off when the market doubted the viability of large AI expenditures and began to weigh competition from China more heavily.
At the same time, funds are increasing their exposure to hyperscale cloud companies—the biggest providers of cloud services that have enough scale to rapidly expand AI infrastructure.
“Hyperscale companies are now among the biggest beneficiaries of the AI paradigm shift,” said Brian Barbetta of Wellington Management, which manages about 1,3 trillion dollars in assets.
He added that such companies remain key positions in the fund’s portfolios, and his team recently even increased exposure to a number of these businesses.
Interestingly, the four largest AI capital expenditure spenders this year have lagged the Philadelphia Semiconductor Index in stock performance. At the same time, specialized compute operators CoreWeave and Nebius have shown substantially better momentum.
Which companies could be AI boom winners
Despite the rapid rise of specialized operators, some investors believe that in the long term the biggest cloud companies will reap the greatest benefits from current investments.
Richard Cloud of Janus Henderson notes that closer to the end of 2027 year and in 2028 year hyperscale companies could start to grow profits and cash flows faster than their incremental capital expenditures grow.
According to him, Amazon is one of the fund’s largest overweight positions. “Today’s capital expenditures are tomorrow’s sales,” Cloud explained.
At the same time, investors urge not to pit chip makers against cloud companies. John Lemb of Capital Group, which manages about 3,6 trillion dollars, believes AI should be viewed as an entire ecosystem.
Analysts say the separate advantage will be for companies that control both computing power and software tools to use AI efficiently. That is why Amazon, Microsoft, and Google may have more durable competitive advantages than specialized neocloud companies.
The latter may come under pressure when new compute power comes to market and its prices normalize. In addition, their reliance on debt financing could make the business more vulnerable.
Meanwhile, the current valuations of large cloud companies remain below the peak levels seen after the pandemic. For example, Microsoft trades at about 24,6 forward P/E, while Meta’s is around 17,6.
However, even for the biggest players the key question remains—how quickly can they monetize investments in AI. According to LGF+ZEST asset manager Alberto Conca’s estimate, monetization of the technology must rise by 5 – 13 times to justify current spending plans.
Therefore, as the market matures, the number of companies able to reap excess profits from AI is likely to shrink. The best positions will belong to businesses with a scalable technology base, a large customer network, and control over their own infrastructure.
Meanwhile Nvidia is launching a large-scale financial initiative of over 500 billion dollars to develop AI infrastructure, and Goldman Sachs is already looking for potential investors to participate in the deal. Banks, insurers, asset managers, and private credit funds may join the financing.
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