Fidelity Investments Director of Global Macro Jurrien Timmer stated that the artificial intelligence trade has been "dead money" for more than three months, despite continued investment from major technology companies. Timmer noted that token expenditures and GPU lease rates have remained flat or declined, with the price of memory being the only component still showing upward movement.
Fidelity data indicates that the Silicon Data LLM token expenditure index has fallen by 49% over a 50-day period. Additionally, GPU rental rates for H100 and A100 chips have cooled sharply after peaking earlier in the year with gains of 56% and 16%, respectively.
Timmer characterized the current buildout as inflationary, warning that corporate demand for capital is climbing at a rate of $3.3 trillion. He noted that U.S. hyperscalers are on pace to spend approximately $916 billion on capital expenditures over the next 12 months. The combined capital expenditures from Alphabet Inc., Amazon.com Inc., Microsoft Corp., Meta Platforms Inc., Oracle Corp., and Space Exploration Technologies Inc. are expected to exceed $1 trillion by 2027.
Despite the near-term stall, Timmer expressed a long-term belief that AI will change daily life and potentially unleash a productivity miracle. Ark Invest’s Cathie Wood has also projected that the AI revolution could have an economic impact dwarfing the Industrial Revolution, with real GDP growth potentially reaching 7% or more within five years.
Regarding current market performance, the Invesco QQQ Trust (NASDAQ: QQQ) closed 0.93% higher on Tuesday at $747.46. The iShares PHLX SOX Semiconductor Sector Index Fund (NASDAQ: SOXX) gained 2.56% to close at $572.78.
