The biggest winners from the rotation have been memory and semiconductor stocks. Memory chipmaker Sandisk ( SNDK ) is up about 800% this year, and the Global X Artificial Intelligence & Technology ETF, which focuses on memory-related companies ( DRAM ), is up about 140%. In microprocessors, Micron Technology ( MU ) has gained about 230% this year, and the VanEck Semiconductor ETF ( SMH ) 67%.
The investments highlight a growing preference for the companies providing the infrastructure behind the AI boom over the hyperscales funding it.
In addition, capital has been attracted SpaceX (SPCX), Elon Musk’s space exploration company, which is also expanding into artificial intelligence. Last week, the company raised $75 billion in the largest IPO in history.
While artificial intelligence has become the market’s dominant investment theme, the money required to fuel the growth is rising even faster. Google parent Alphabet ( GOOGL ), Amazon, Microsoft and Meta are expected to spend a combined $725 billion on capital expenditures this year, up 77% from last year’s record level.
Free cash flow no longer fully finances these ambitions. Alphabet, Amazon and Meta together borrowed about $93 billion last year, or about 6% of total corporate bond issuance.
Another source of support is also fading. Share buybacks are down 33% to $132 billion by 2025, reducing a key pillar of demand for these stocks.
