As fears of an AI bubble grow, Bristlemoon says Mag 7 spending boom still to run | The Business

The steep run up in AI related stocks has triggered fears about lofty valuations, fanned by Wall Street executives from Goldman Sachs and Morgan Stanley warning of a 10% - 20% correction in the next 12 to 24 months. Since ChatGPT launched in November 2022, AI related companies have accounted for 75 per cent of S&P 500 returns, 80 per cent of earnings growth, and 90 per cent of growth in capital expenditure (CapEx) growth. Bristlemoon Capital chief investment officer, George Hadjia joins The Business to unpack his latest report, "Framing the AI Bubble", he says hyperscalers such as Meta or Google, are spending hundreds of billions of dollars to reach what's called artificial general intelligence (AGI). "It's a bit of an arms race at the moment and they view the attainment of AGI is so important that if one of their competitors were to reach that before them, then it's a bit of a problem, it's almost existential", he says. "So really, we're just seeing the CapEx budgets go one way and that's up."
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