1、ab27 August 2025Global ResearchHOLT Global ViewpointAI bubble?What are the risks and what are some attractive global alternatives AI excitement fuelling unprecedented capex and R&D splurge The excitement surrounding Artificial Intelligence is pervasive,driving strong consensus CFROI revisions among

2、AI stocks and the broader US Tech sector.This coincides with an unprecedented surge in capital expenditures among US Tech giants.The AI capital expenditure plans committed by Meta,Alphabet,Amazon,and Microsoft alone exceed the total capital expenditures of the entire US and European listed Energy or

3、 Utilities sectors combined.In the race to develop the leading AI technology,US Tech giants have also ramped up their R&D effort.Here too,the scale of the outlays is unprecedented.In 2024,the combined R&D spend of the hyper scalers,Apple,Nvidia,and Broadcom surpassed the total R&D spend of all liste

4、d European equities.They appear to have the financial strength for thisUS Tech giants generate some 37%of the US total economic profit.With such a commanding spending clout,it may be tempting to assume that US Tech will reap all the rewards from AI and that their economic moats are unassailable.Valu

5、ation of AI stocks closing in on dotcom levelsFor all the buzz around AI,however,many of the use cases are premised on future,rather than current revenue opportunities and even prominent AI figures like Sam Altman,the CEO of Open AI,acknowledge that the sector may be in a bubble.As it stands,the US

6、Tech sector trades on an aggregate HOLT Economic PE35x,around post dotcom peaks.This leaves little room for cash flow disappointments,especially given some of the unknowns that could impact the medium term CFROI and growth trajectories of AI players(e.g.unclear ROI on the capex ramp up,energy supply