FidelityNow: How might AI infrastructure spending shape the tech sector?
Denise Chisholm, Fidelity’s Director of Quantitative Market Strategy explains why closely monitoring investments in AI infrastructure is central to how she assesses tech sector developments.
Transcript
[00:00:07.166] I think one of the things that I am going to be watching is CapEx in technology.
[00:00:11.967] So that is one of the big sort of trends that people are talking about in AI.
[00:00:16.233] Are these CapEx numbers too big?
[00:00:18.133] I think that they're eye-popping when you think of them on a nominal basis,
[00:00:21.533] but there's also eye-popping free cash flow. So you always have to rescale them.
[00:00:26.800] That's why I look at either CapEx relative to sales or CapEx relative to free cash flow
[00:00:32.167] for the technology sector to see if it really is impactful or growing above average,
[00:00:38.201] or in that way that looks anomalous. Right now, when I look at the data, oddly enough,
[00:00:43.667] CapEx relative to sales for the technology sector is right in the median level of history,
[00:00:49.068] meaning that as much as people are saying, we are spending so much money on AI
[00:00:54.068] for this aggregate sector, they have the cash and they have the sales to be able to spend.
[00:00:59.035] So I am keeping my eye on that data set for any kind of anomalies, but I'm not seeing anything yet.
