Why are Microsoft and Amazon being bought, while Apple and Meta are prone to being sold? The conditions for companies to win in Phase 2 of AI investment
Hello. I am your reporter, Sanaichi.
Previously, I visited the front lines of semiconductor manufacturing equipment and experienced their overwhelming technical capabilities. Based on that experience, in my previous article, I objectively unraveled 'why capital is gathering in Japanese semiconductor and electronic component-related companies' from the perspective of full-scale capital investment (actual demand).
Thanks to you, I have received a great deal of feedback, and I feel we have shared a sense of conviction that AI investment is shifting from expectations to a phase of producing solid numbers (earnings).
However, now that the financial results for major Japanese and US companies are in, the stock market has already entered a severe selection phase 'beyond that'.
What if the AI boom we have been watching so far is actually just the tip of a giant pyramid?
Investment decisions and business strategies that merely chase superficial news—such as how generative AI is amazing or that there is a shortage of AI semiconductors—and combine related stocks like a puzzle are now even a risk.
What we really need to look at now is the more physical, gritty, and extremely massive 'real economy infrastructure' required to operate the giant brain that is AI.
The evolution of AI and physical constraints. It is precisely where these seemingly unrelated themes collide that unimaginably huge demand and business opportunities, which no one has noticed yet, are lying dormant.
In this article, I will broaden my perspective and dig deeper, while building on the facts from the previous one.
Where is the final destination for the massive capital flow in Phase 2 of AI investment?
Why is the evolution of technology bringing unprecedented prosperity to seemingly retro physical infrastructure industries such as power equipment, transformers, and communication networks?
To all investors and business professionals who wish to step away from the noise of the boom and calmly discern structural changes.
I am about to hand you a 'new pair of glasses' to identify the true winners of the AI era.
Please enjoy this story to the end, which goes beyond mere commentary and allows you to feel the dynamism of the real economy.
Summary of this article:
The era where any large-cap tech stock would rise is over. While capital is concentrating on Microsoft and Amazon, which are immediately recouping massive AI investments as actual cloud revenue, Apple and Meta, which face concerns regarding supply constraints and the path to monetization, are being subjected to a wave of intense selection. In this article, based on the latest financial data and real-economy capital flows, I will reveal the essence of the AI market Phase 2—the structure of actual demand—and the adjustment-based decision-making techniques we need to survive.
From dreams to results: The true nature of the 'selection' dominating the AI market
The easy phase of thinking you can win just by putting large-cap tech stocks in your portfolio is completely a thing of the past.
In the recent US market, despite being Big Tech, the fortunes of their stock prices have diverged sharply. While Amazon's cloud business, AWS, recorded its highest growth rate in over four years, and Microsoft is being bought up on the back of its solid cash-generating power, Apple has seen its stock price plunge by about 7 percent due to sluggish sales forecasts and supply constraints.
This decisive divergence in stock prices means only one thing. The market's evaluation criteria have completely shifted from 'the future dreams brought by AI' to 'the real earnings that AI is generating right now.'
■ Companies being bought: The power to immediately convert massive investments into cloud revenue
The biggest reason Microsoft and Amazon are being bought lies in the fact that the massive capital they have invested is immediately turning into reliable cash income known as 'cloud usage fees.'
The rapid growth shown by Amazon's AWS is not merely an expectation. It is a manifestation of the real economy, where the massive investments the company is making in its own data centers and AI infrastructure are directly linked to sales as actual demand from corporate clients.
Right now, money is flowing not just into the AI software on the other side of the screen. Real demand is rapidly spreading across the entire physical infrastructure surrounding AI, from data center construction, power equipment and transformers to supply massive amounts of electricity, cooling systems to keep servers cold, and even optical communication equipment that handles high-speed data transmission. The reason funds are flowing into seemingly retro industries like power lines and transformers, as mentioned in the introduction, is precisely because they are essential infrastructure that resolves the bottlenecks of this real economy. This 'speed of the cycle from capital investment to revenue recovery' is the absolute condition for companies that are being bought.
■ Companies being sold: Uncertainty in growth prospects and bottlenecks in the real economy
On the other hand, the background behind why companies like Apple and Meta are prone to selling pressure lies in the difficulty of seeing short-term returns on investment amounts and the existence of bottlenecks in hardware procurement.
In Apple's case, although they presented advanced AI features, the market was discouraged by supply-side constraints, including semiconductors, and the difficulty in predicting when this will lead to explosive sales growth for the iPhone and their services. No matter how strong a brand's power is, if growth prospects do not meet market expectations, funds will be withdrawn without mercy.
The era of being bought for fame is over; the 'true value of investment efficiency'—how many dollars of cash each dollar invested generates—is now being questioned.
■ A work-style perspective: Abandoning perfect plans and winning through 'adjustment power'
This severe selection structure of the market provides very powerful implications for our investment judgments and decision-making in business settings.
In today's rapidly changing world, starting to move only after creating a 100 percent perfect plan is, in itself, the greatest risk. What is necessary to win is nothing other than 'adjustment power': setting a direction to aim for, moving to execution immediately, and flexibly fine-tuning the policy according to changes in the market and the situation.
Simply introducing tools like technology or data into your company or your own operations will not generate a single yen in results. Only when the people on the front lines who handle them struggle and continue to improve operations to fit the field, acting as a 'medium,' are real results and value created.
Now that the market's discerning eye has been sharpened, let's stop being swayed by mere trends and buzzwords. Only those who can identify the real numbers and actual demand on the front lines, and who continue to flexibly update their own decision-making, will be able to secure a certain victory in this new phase.
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