Academy Securitys: AI equities are under capital expenditure pressure and AI bonds have another opportunity

On 10 August, AI capital expenditure was generating a rare split in equity. Peter Tchir, an Academy Securities strategist, was cautious about the valuation of the AI stock, arguing that the market could still have a new round of questioning the size and return of capital expenditure; but in the credit market, he continued to value the bonds issued to finance data centres and AI infrastructure, with particular emphasis on their overall yield and the narrow potential of credit spreads. This structure is reflected in the recent issuance of debt by Alphabet. The company plans to finance between $20 billion and $25 billion through the United States bond market to respond to large-scale AI investment needs; at the same time, the market has previously raised concerns about the free cash flow and stock valuation of Alphabet due to capital expenditure expansion. Reuters data show that Alphabet is not an example, and the technology giants Amazon, Meta, Oracle and others are also significantly increasing their debt financing this year. In other words, the same AI expenditure may mean something quite different for two categories of investors: stock investors fear burning money and returns, while credit investors may acquire higher-yielding assets provided by high-quality issuers. This is also an important change in the current repricing of AI transactions from “stock-only” to internal capital structures. Kim Xian