Analyst: Investor anxiety over AI infrastructure spending may have peaked.

According to Barton Crockett, senior analyst at Rosenblatt Securities, the large-scale data center operators have reached the "peak of negative sentiment" among investors regarding their massive expenditures. Crockett stated in an interview that although the capital expenditures of Amazon.com, Inc. (AMZN.US), Alphabet Inc. Class C (GOOGL.US), Meta (META.US), and Microsoft Corporation (MSFT.US) have significantly increased, the situation is expected to improve as the expenditure levels stabilize. The concerning data shows that the total capital expenditures of the top four large-scale data center operators increased by approximately 66% year-on-year, leading to a significant decrease in these companies' free cash flow. However, Crockett believes that the period of greatest investor anxiety may have passed. He stated, "I think what you're most worried about right now is spending and how they convert that into profit." In comparison to the large-scale data center operators, Apple Inc. (AAPL.US) stands out for its relative stability. The company "does not invest heavily in massive data centers like the large-scale data center operators," allowing it to better navigate the current market turbulence. Crockett described Apple Inc.'s ability to remain stable in the face of rising memory costs and supply chain issues as "flexibility," highlighting the company's strength. He also noted that recent announcements are consistent with a significant increase in gross profit margin in the coming months. Among the various large-scale data center operators, Crockett recommends Meta as his top choice due to the company's strong revenue growth and expected return on investment. He also pointed out that if Amazon.com, Inc. can control the "competition noise from Anthropic," then Amazon.com, Inc. presents an interesting investment opportunity. Analysts believe that the current hardware-focused cycle may give way to a rise in service and software stocks. Crockett maintains a "hold" rating for Netflix (NFLX.US), calling it "a well-managed company in an increasingly mature market environment." He noted that while the company's EBITDA growth rate is around 20%, its competitiveness on user-generated content platforms has decreased as young viewers shift away, presenting challenges. He stated that Netflix's viewership growth is no longer "rocketing." Looking ahead, Crockett predicts that as the large-scale data center operators begin to "extract revenue from their investments," the narrative in the tech sector will shift. He expressed confidence that next year's capital expenditure growth will not repeat last year's two-thirds increase, creating a more favorable environment for these companies to transition from heavy spending to revenue generation.