Every Hyperscaler Raised Capex Again. These 3 Boring Industrials Get Paid No Matter Who Wins the AI Race.
Key PointsCaterpillar provides much more than heavy equipment.
The story highlights how large technology companies, known as hyperscalers, are increasing their capital expenditures (capex) to build data centers and acquire necessary equipment for developing AI technologies. Notable companies like Alphabet, Amazon, and Meta Platforms have raised their capex forecasts, with Alphabet increasing its forecast from $185 billion to $200 billion, Amazon from $200 billion to $220 billion, and Meta Platforms issuing new debt to fund its AI ambitions.
The market seems to be taking a critical view of tech companies that spend heavily on AI without demonstrating results, a phenomenon the author refers to as the "show me" phase of AI. While individual tech stocks may yield varying results in the forthcoming earnings reports, the author suggests that investing in industrial companies involved in the infrastructure required for AI could be a safer bet. Caterpillar, Eaton, and Vertiv Holdings are three such industrial stocks that are benefiting from the AI boom.
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