The AI Scare Trade Cools Down... For Now

Identifying the winners and losers in the AI spending battle.

Key Takeaways

• AI Disruption Dominating Earnings Calls: While it cannot be denied that the earnings reporting season has been solid (guidance a little less so), the AI disruption has taken over to such a point that the number of mentions on company calls has doubled quarter over quarter.

• Data Center Overbuild Angst: The Doom Loop has emerged as the primary theme in the marketplace — the just-released Bank of America global fund manager survey showed a record-high share now believing that companies fueling the data-center spending boom (and AI infrastructure in general) are at risk of “over-investing.”

• Even Jet Engines Get Pulled into AI’s Power Crunch: The winners in this space have now been clearly identified as semiconductors, energy infrastructure, and anything facing escalating demand and price advances from the connection to the AI spending binge, because these mega-billion capex commitments are a boon to these areas (forcing shortages in these benefiting industries). One area in particular that is seeing huge positive spillover effects in this AI spending binge is jet engines (including leasing and repair), which are increasingly being relied on to power up the data-center boom