Could a pullback on AI capex for the mega-cap tech stocks be a positive? – Analyst

Seeking Alpha News (Thu, 10-Apr 12:34 PM)

There are opportunities over the long-term within mega-cap technology stocks, especially if there is pullback on capital expenditures on AI, according to Brave Eagle Wealth’s CIO.

“If we see mega-cap tech pullback on capex spend, that may actually be received as a positive, as investors just a few months ago were raising questions about big tech's extreme spending on AI,” said Robert Ruggirello, chief investment officer at Brave Eagle Wealth Management.

However, Alphabet’s (GOOGL), (GOOG) CEO has recently pledge to invest about $75B to build data center infrastructure. In the fourth quarter of 2024, the company spent $14B to help growth its business across Google Services, Google Cloud, and Google DeepMind.

Alphabet (GOOG) (GOOGL), Amazon (AMZN), Meta Platforms (META) and Microsoft (MSFT) are projected to boost their capex spending to $322B, up about 40% what was expected this year.  

The following are the biggest technology companies with their Seeking Alpha’s Quant rating and their CAPEX Growth year-over-year percentages.

Out of the top 10 stocks, only Adobe (ADBE) is “buy-rated” by Quant. Also, most companies are down year-to-date.

Seeking Alpha's Quant Rating system awards grades to stocks based on key quantitative measures, like valuation, growth and profitability.

  • Apple (AAPL) – Quant rating: 3.38; -25.53% YTD; CAPEX Growth YoY: 4.51%
  • Microsoft (MSFT) – Quant rating: 3.47; -12.03% YTD; CAPEX Growth YoY: 57.81%
  • Nvidia (NVDA) – Quant rating: 3.46; -23% YTD; CAPEX Growth YoY: 202.71%
  • Broadcom (AVGO) – Quant rating: 3.48; -27.61% YTD; CAPEX Growth YoY: 11.68%
  • Cisco Systems (CSCO) – Quant rating: 3.47; -6.54% YTD; CAPEX Growth YoY: -1.73%
  • International Business Machines (IBM) – Quant rating: 3.36; 1.66% YTD; CAPEX Growth YoY: -15.82%
  • Palantir Technologies (PLTR) – Quant rating: 3.49; 11.6% YTD; CAPEX Growth YoY: -16.41%
  • Intuit (INTU) – Quant rating: 3.35; -10.28% YTD; CAPEX Growth YoY: -52%
  • QUALCOMM (QCOM) – Quant rating: 3.42; -15.21% YTD; CAPEX Growth YoY: -12.8%
  • Adobe (ADBE) – Quant rating: 3.94; -22.53% YTD; CAPEX Growth YoY: -41.89%