Buy chip stocks, avoid hyperscalers on AI spending doubts

What happened

Melius Research's Ben Reitzes told CNBC to buy semiconductor stocks—Nvidia, Broadcom, Micron, AMD, and Dell—citing their strong earnings and revenue growth tied to AI demand. He recommends holding Microsoft, Oracle, and Google until their AI revenue models become clearer, given their massive capital expenditure without yet-proven cash generation.

Why it matters

The debate has shifted from whether AI demand exists to whether companies spending heavily on it will earn money back. Reitzes argues the real profit lies with compute suppliers rather than the cloud giants paying for buildout. Hyperscalers are handing cash to chip makers while their own free cash flow is declining—Microsoft's CapEx surged to $30.88 billion（約4.9兆円） year-over-year, yet the stock is down 23.7% year to date; Alphabet's free cash flow fell 46.6% year over year despite $35.67 billion（約5.7兆円） in CapEx.

What to watch

Hyperscaler July earnings will be the next checkpoint, where CapEx guidance and any AI revenue disclosures will show whether the gap between chip makers and cloud giants keeps widening. The data currently favors the sellers of compute over the spenders.