A busy week of Big Tech earnings left us feeling more assured about our investments in Nvidia , Broadcom and Eaton as spending on artificial intelligence chips and data centers remain clear-cut priorities. The quarterly reports from Club holdings Alphabet , Microsoft , Meta Platforms and Amazon this week varied in overall quality, but a common thread woven across them all was a continued commitment to big investments in AI. More crucially, all four companies indicated their investments — reflected in their capital expenditures, or capex, outlooks — were picking up steam. Capex is money spent to buy or upgrade physical assets, including the construction of data center buildings and the computer hardware inside them. Nvidia, Broadcom and Eaton are poised to benefit from this ongoing spending: Nvidia as the dominant maker of AI chips; Broadcom as a partner with Alphabet on the Google parent’s proprietary AI chip and a provider of data-center networking technology more broadly; and Eaton as a supplier of electrical components and power systems used to run data centers. Among the three, Nvidia is the biggest winner, given how much of its overall revenue is tied to AI initiatives, followed by the more diversified efforts from Broadcom and Eaton. Nevertheless, Broadcom and Eaton’s exposure to the fast-growing AI market is part of our investment cases for both firms. For its part, Eaton’s earnings report Thursday morning fortified our thesis, offering an optimistic 2024 outlook that includes strength in its data center business. Nvidia is scheduled to report quarterly results on Feb. 21, while Broadcom is expected to follow shortly thereafter. Big Tech spending AMZN 1Y mountain Amazon’s stock performance over the past 12 months. Amazon’s capital expenditures are expected to increase year over year in 2024, CFO Brian Olsavsky said Thursday. The primary drivers of the uptick will be infrastructure investments to fuel growth in cloud-computing unit Amazon Web Services…
Read the full article here
