Viewpoint: Concerns over AI capital expenditure intensify, causing simultaneous pressure on global technology stocks
BlockBeats report, June 26: With the continued impact of Micron (MU)'s earnings report, global tech stocks experienced widespread sell-offs. Major tech stocks such as Apple (AAPL) also saw significant declines, raising concerns about the profitability outlook of traditional tech giants. Analysts pointed out that although Apple has not deeply participated in the AI infrastructure capital expenditure race, it faces rising costs in the AI supply chain and pressure to adjust product prices. The market is worried that price increases may suppress end-user demand, further affecting revenue and profit performance over the next few quarters. As a result, investors have opted to take profits early.
Meanwhile, the market's focus has shifted from AI computing power demand to capital returns. According to Bloomberg data, the massive free cash flow accumulated by the world's five largest hyperscale cloud service providers over the past twenty years has noticeably declined in the past two years as high-intensity AI capital spending continues. Analysts believe the current market is following a "selling shovels makes money, buying shovels faces pressure" trade logic—AI hardware and semiconductor suppliers benefit from sustained orders and see their stock prices rise, while cloud computing and internet giants that bear huge AI investments face pressure on cash flow and profitability. If AI hardware costs continue to climb in the future, and if, as Jensen Huang said, the AI infrastructure buildout cycle lasts for about ten years, who will ultimately bear the ongoing investment, and how commercialization returns are realized, will become the core challenge for global tech stock valuations.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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Updated Version 3 - According to the Financial Times, McKesson and CD&R are close to reaching a deal worth more than $5 billion to acquire Option Care.
In the fifth paragraph, a quote from analyst Sahil Pandey was added. Reuters, October 5 - According to the Financial Times, citing informed sources, pharmaceutical distributor McKesson (MCK.N) and private equity firm Clayton Dubilier & Rice are about to reach an acquisition agreement to purchase infusion service provider Option Care Health, with the deal valued (including debt) at over 5 billions USD. After the report was published, Option Care's share price rose by 21% in after-hours trading. The report stated that the deal could be announced as early as Tuesday, but negotiations could still fall through. This potential acquisition would be McKesson’s latest move in expanding its healthcare services portfolio. In August this year, the company agreed to acquire Precision Medicine Group for about 2.25 billions USD (link), as part of its effort over the years to strengthen high-growth business sectors. Leerink Partners analyst Michael Cherny said the “strategic logic” of the deal makes sense, as it would expand McKesson’s business from physician offices to care settings in the home and alternative sites. Option Care provides infusion services that allow patients to receive intravenous treatments at home or other outpatient settings, eliminating the need to go to the hospital. McKesson has previously been restructuring its business portfolio by divesting non-core assets and investing in fields such as oncology and specialty care (link). Driven by the growth of its specialty distribution business and contributions from acquisitions, revenue for its oncology and multi-specialty business segment grew by 33% in the latest fiscal quarter. McKesson declined to comment, while CD&R and Option Care did not immediately respond to Reuters’ requests for comment regarding the report. (For non-English speakers' convenience, Reuters offers automated machine translations of its reports in several languages. As there may be mistakes in the automated translations or some context may not be included, Reuters does not guarantee the accuracy of the automated translation text, which is provided solely for readers’ convenience. Reuters bears no responsibility for any damages or losses caused by the use of automated translation functions.)
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