Macro guru Lyn Alden believes that the AI boom is about to enter a cooling period that could last longer than most investors expect.
In a new interview on The Money Matters Network, the macro expert highlights the relationship between the price of AI stocks and capital expenditures (CapEx).
According to Alden, investor enthusiasm and spending plans across the largest technology companies are tightly linked, with share prices leading and capital expenditure following on a lag.
“I think that the share price and the CapEx are actually somewhat intertwined so that they’re not just two different things.”
She believes that hyperscalers will keep pouring funds into AI CapEx as long as investors respond favorably. But Alden thinks that the early stages of the AI cycle are now over, and investors should now brace for a period of correction or consolidation.
“But I do think that the price rolls over first and then CapEx. It’s quite possible that we’re in the rollover phase for price now… I do think that in the next 12 months or so, we could see the rollover in kind of the euphoria of the price. And then CapEx maybe follows by a year or two. If I had to give a base case, it might be something like that.”
Last week, a handful of AI names, including Oracle (ORCL), Meta (META), Palantir (PLTR) and AMD (AMD), entered bear territory after declining more than 20% from their record highs.
But Alden stresses that any cooling period is not a call for a long-term top in the sector.
“I think we probably see one of those in the timeframe that I mentioned. It doesn’t mean that it’s over forever. It just means that basically probably go through a cooling cycle to see, okay, where is this actually working? Where does this actually have a chance of being profitable? Where is this malinvestment?”
Alden says the coming period is an intermediate recalibration rather than the end of the AI buildout.
“I view it more as in terms of kind of an intermediate kind of rollover rather than trying to call like a gigatop.”
She closes by saying long-range spending across AI infrastructure is still set to be enormous, even if it moves in waves.
“I think that the amount of CapEx over the next five, 10, 15 years is going to be immense. I just think it won’t be a straight line. I think it’ll have some sine wave to it.”
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