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Key points:
AI hyperscaler capex seen almost doubling year on year, driving semiconductor demandMicrosoft viewed as a relative value opportunity versus Alphabet and AmazonHigh‑bandwidth memory market seen structurally undersupplied, supporting MicronSoftware sentiment improves, with focus on Atlassian, Salesforce, ServiceNow and IGVShift from seat‑based to usage‑based SaaS pricing highlighted as a key long‑term trend
Daniel Reaper from Grey Street Partners views the latest US earnings season as a powerful reinforcement of the AI-driven investment thematic. Reaper notes that S&P 500 earnings surprise to the upside, led by big tech, with hyperscalers dramatically lifting capex guidance. Microsoft, Amazon and Alphabet alone are seen allocating more than US$570 billion to capex this year, with broader hyperscaler spend estimated at about US$725 billion, almost double last year. Reaper links this surge to high memory chip costs, component constraints and rapid cloud revenue growth at Google Cloud, Microsoft Azure and AWS.
Reaper argues that AI hardware remains the main beneficiary, with Nvidia, Alphabet’s TPUs and AMD all positioned to gain given constrained supply. He sees Microsoft as the more attractive near‑term play versus Alphabet and Amazon, citing its lower forward P/E multiple despite solid growth prospects and concerns around OpenAI and ROI on capex already priced in.
On memory, Reaper is “very bullish” on SK Hynix, Samsung and particularly Micron (NASDAQ:MU), flagging high‑bandwidth memory shortages potentially extending into 2028. He also highlights emerging value in software, pointing to Atlassian (NASDAQ:TEAM), Salesforce, ServiceNow and the IGV ETF, and emphasises a structural shift from seat‑based to usage‑based SaaS pricing.
