I fundamentally agree with you, but the market always trades on the future, so while demand for and investment in AI may remain consistently strong at present, we are certainly (almost) at the peak.
As soon as a hyperscaler or an AI company reports weaker results, the market could take a significant downturn.
As soon as a hyperscaler or an AI company reports weaker results, the market could take a significant downturn.
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@SathosiRuffy Of course, no one can rule that out. What’s making me skeptical of your main thesis right now, though, are the signals coming from the infrastructure sector. The latest quarterly results from Micron, TSMC, and ASML don’t yet point to a slowdown in demand.
At the same time, CapEx forecasts for the hyperscalers in 2027/2028 have even been raised recently. Morgan Stanley now expects approximately $1.2 trillion in hyperscaler CapEx for 2027 and about $1.4 trillion for 2028. (See https://www.investors.com/news/technology/meta-stock-amazon-stock-ai-costs-morgan-stanley/). To me, this does not fit with an imminent end to the investment cycle.
Of course, there remains a risk that individual hyperscalers or AI companies will eventually report weaker results. That is precisely why I am monitoring the “weak signals” so closely. At the moment, however, I see even more signs of ongoing implementation than of an abrupt end to the investment wave.
At the same time, CapEx forecasts for the hyperscalers in 2027/2028 have even been raised recently. Morgan Stanley now expects approximately $1.2 trillion in hyperscaler CapEx for 2027 and about $1.4 trillion for 2028. (See https://www.investors.com/news/technology/meta-stock-amazon-stock-ai-costs-morgan-stanley/). To me, this does not fit with an imminent end to the investment cycle.
Of course, there remains a risk that individual hyperscalers or AI companies will eventually report weaker results. That is precisely why I am monitoring the “weak signals” so closely. At the moment, however, I see even more signs of ongoing implementation than of an abrupt end to the investment wave.
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@ScaleLimits JLL sees the investment supercycle remaining intact through 2030 at >$3 billion, which aligns with your analysis. I agree; if capital expenditures continue, the DIBS story will remain a good bet, even if the market cools off in the short term.
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@ScaleLimits Sorry, I meant 2030—I've edited it.
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•@Keineui Thank you. I'm optimistic that the AI sector will soon recover from this major slump and reach new heights. Of course, that doesn't apply to every stock. I'm really looking forward to the upcoming quarterly earnings reports.
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•@ScaleLimits So you don't really think there will be a 10% correction?
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@SathosiRuffy I don't understand your question. We're currently seeing a correction that's well over -10%, and in some cases over -50%. Maybe it will even go down a little further. But then there will probably be an upward trend.
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@ScaleLimits The question, of course, is which stocks to look at. The broader market is still trading near its all-time high, as is the FTSE ALL World.
I was thinking more of a correction in the Mag7 and the S&P 500.
TSMC, Micron, and others are, of course, currently experiencing a correction.
I was thinking more of a correction in the Mag7 and the S&P 500.
TSMC, Micron, and others are, of course, currently experiencing a correction.
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