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Midterm elections provided the hyperscalers with the excuse they needed to cut back on spending, says Jefferies strategist
MarketWatch·- Jefferies strategist Chris Wood argues that a slowdown in AI capital expenditure could benefit hyperscalers by preventing malinvestment as return on invested capital declines. - He notes that forecasted 2027 AI capex hovers around $ 1.6 trillion, while the median return on invested capital is expected to drop from 27.2% in 2024 to 15.7% by 2028. - The strategist highlights that political shifts and disciplined deployment are driving capital rotation into sectors like pharmaceuticals, emerging markets, and energy.