AI and Data center trade

[Mocity31]

The 1 Trillion dollars in CAPEX spending this year and next by the Hyperscalers, MFST, AMZN, META, GOOG and others, is old news. Looking at the Mag7 ytd its down about 2%. The SP500 is up about 10%. The Russell 2000 Index is up more than twice that, 21%. Sure looks to me like the low hanging fruit has been picked. If you're throwing money at MegaCap growth Tech companies you may be late to the party.
The Russell tracks 2000 of the smallest publically traded companies, most you've probably never heard of.
Out of the dozen or so different parts of this buildout, Chips, Memory, Network and Fiber, Software, Cloud companies, Power companies, Construction and engineering, HVAC and so forth.
I don't believe the AI trade is over. At this point in the cycle its really a stock pickers game. Look at some of the big winners on the Russell 2000. Most are AI and Data center build out companies you've never heard of with $2.5 billion dollar market caps and a few hundred employees. Bloom, Credo, and Sterling are not the sexy names that perk up the ears when you tell your buddy you've more than doubled your money when he's sitting on NVDA he bought at $240 and its trading at $193 or he bought Oracle at $240 and its trading at $140

[98aggie77566]

Well in fairness....you thought the AI stocks were overbought back in 2024.....

https://www.dosfrios.com/ttmb/forum/...or-you-ai-guys

[98aggie77566]

I'm looking for 20% on my tech stocks.....and 6% on the overall market funds.....or some mix thereof that gets me to the same goal.

So far so good.

[Mocity31]

Watching this AI play out, it is funny that the 3 major players, Google, ChatGPT, and Grok have come to the point of publicizing "my AI is smarter than yours" or "more accurate than yours". The ROI is still the trillion dollar question. What I find interesting is out of that $1 trillion dollars, Google has spent about $200 billion developing Gemini.
Apple did not develop an AI chat. Apple pays Google an estimated $1 billion per year to "rent" or use Gemini. Sounds like a smart move to me. Maybe that's why Apple has hit an all time high this week. More free cash flow, less debt, no question about whether the capex dollars these hyperscalers have spent, will have a return on their hundreds of billions invested.
Reminds me of how Apple used ATT and Verizon to build out the cell phone infrastructure and Apple just made the gadgets with cheap labor and became the largest company on the planet for a long time and left ATT and VZ with billions in debt.
Just my observation. You're in the business and know a lot more than me