MILAN, (Reuters) – The parabolic rally in AI chipmakers has run into turbulence amid concern about valuations and the sustainability of their bumper revenues, with some investors quietly positioning for a slowdown in the near-trillion dollar spending boom that could provide a boon to the hyperscalers footing the bill.
For most of the past two years, the opposite trade prevailed: investors piled into semiconductor and infrastructure companies on the assumption that Microsoft , Amazon, Alphabet and Meta would keep accelerating spending on the buildout of data centers.
But that spending now looks set to slow, with UBS estimating hyperscalers’ capex will rise 76% this year to $673 billion, but will increase by only 25% next year and just 6% in 2028.
Some active managers have already cut their exposure to chip stocks and are adding shares of hyperscalers themselves, which have sharply lagged the rally in chipmakers. They are also buying into software stocks and sectors expected to benefit from AI adoption, such as financials and healthcare.
“Once they stop increasing their capex, it will definitely be a relief for hyperscalers and a negative signal for the semi industry,” said Alexis Bossard, global equity portfolio manager at Edmond de Rothschild Asset Management, who has already cut exposure to semiconductor stocks, which he believes have become too expensive relative to expectations.
