"Last night's earnings from Meta, Alphabet, and Amazon answered the 'is the AI capex trade cracking?' question with their checkbooks. They are spending and even with the 'weakest' earnings of the group in Meta, you can see the revenue growth flowing as a result."
"Cadence Design Systems is the toll bridge. Every accelerator, custom ASIC, and networking chip in the AI buildout gets designed on Cadence or Synopsys software. Q1 2026 revenue was $1.47 billion, up 18.7% year over year, with a record $8.0 billion backlog."
"Credo Technology makes active electrical cables that move data inside the rack. When Blackwell racks pull forty times the throughput of Hopper, connectivity becomes crucial for performance."
Hyperscalers are expected to invest over $1 trillion in capital expenditures in a single year, a trend highlighted by recent earnings from Meta, Alphabet, and Amazon. These companies are significantly increasing their spending, indicating strong revenue growth linked to AI. The frequency of discussions around capex has surged, emphasizing its importance in the current market. Specific investment picks from a notable AI portfolio include Cadence Design Systems and Credo Technology, which are positioned to benefit from the ongoing AI buildout and demand for advanced technology solutions.
Read at 24/7 Wall St.
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