🕒 Created · Updated

Keith Lerner of Truist observes that massive capital expenditures in AI are beginning to yield significant earnings for megacap hyperscalers.

Keith Lerner, chief investment officer at Truist, reports that heavy spending on artificial intelligence is starting to produce tangible earnings for megacap hyperscalers. While companies like Microsoft, Amazon, and Alphabet are allocating hundreds of billions of dollars to AI infrastructure, analysts suggest that demand is beginning to catch up with capital expenditure. JPMorgan analysts recently raised the S&P 500 price target to 8,000, citing strong demand for cloud computing, which serves as a critical bottleneck for AI data build-outs. However, some critics argue that Big Tech companies may be under-reporting their true costs. A report in The Wall Street Journal suggests that while corporations reported spending over $600 billion on AI infrastructure in the past year, the actual expenditure could be as high as $3 trillion. Critics warn that these companies are reviving fraudulent accounting practices, such as using variable interest entities to hide debt and spending from investors. Despite these concerns, tech and AI remain primary trades to watch for the rest of the year.

Sources