CIO maintains a positive view on the investment case for the AI growth story and recommends an active approach. (UBS)
Amazon said it plans to boost capital expenditures to more than USD 100bn this year to capture a “once-in-a-lifetime” opportunity in AI, after spending USD 83bn in 2024.Earlier this week, Alphabet said it will spend USD 75bn on its AI buildout this year, almost 30% higher than market expectations.
Our view: Without taking any single-name views, our conclusion following the recent tech reporting season is that the near-term threat to AI capex from low-cost models like DeepSeek is limited. In fact, we have further revised up our capex estimates and now expect 2025 capex from the Big 4 US tech firms to grow by 35% to USD 302bn. This compares with our previous forecast of a 25% increase to USD 280bn, and would represent a more than 100% growth from the USD 148bn capex seen in 2023.
We maintain a positive view on the investment case for the AI growth story and recommend an active approach. Given that tariff- and export control-related uncertainty can spur periods of volatility ahead, investors should consider taking advantage of volatility through structured strategies and by buying the dip in quality AI stocks.
Original report - Treasury yields fall ahead of US jobs release, 7 February 2025.
