--- title: "Seeking AI Winners! Top Global Institutions Increase Stakes in Hyperscalers While Shorting Compute Leasing Companies" type: "News" locale: "en" url: "https://longbridge.com/en/news/296090179.md" description: "The logic behind AI investments is shifting toward commercial profitability. Top asset management firms are actively increasing their positions in hyperscale cloud service providers (such as Microsoft and Amazon) that possess strong infrastructure and customer relationships, favoring their robust cash flow returns and competitive moats. In contrast, the dividends for \"neocloud\" compute leasing companies, which rely heavily on high-priced rentals and high debt, are facing erosion, with some institutions already recommending short strategies" datetime: "2026-08-17T06:09:11.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296090179.md) - [en](https://longbridge.com/en/news/296090179.md) - [zh-HK](https://longbridge.com/zh-HK/news/296090179.md) --- # Seeking AI Winners! Top Global Institutions Increase Stakes in Hyperscalers While Shorting Compute Leasing Companies The narrative surrounding AI investment is undergoing a critical shift. As the latest quarterly reports from tech giants like Microsoft and Amazon alleviate market concerns about returns on capital expenditure, top global asset management firms are shifting their focus from "how much was spent" to "who can truly generate profits." Institutions such as Wellington Management, which manages approximately $1.3 trillion in assets, and Capital Group, managing around $3.6 trillion, are actively increasing their stakes in hyperscalers while continuing to hold semiconductor positions. These institutions believe **that the accelerating growth of cloud computing and the persistently tight supply of computing power will benefit companies like Amazon, Microsoft, and Google, which control vast infrastructure and customer relationships, the most.** Meanwhile, "neocloud" service providers, which rely on leasing computing power at high prices, are viewed as potentially vulnerable targets, with some institutions already recommending short positions. This shift in market sentiment is directly reflected in asset prices. The Philadelphia Semiconductor Index has risen by approximately 75% year-to-date, while the stock performance of the four major AI capital expenditure giants has lagged behind this gain. In contrast, compute leasing companies CoreWeave and Nebius have surged by approximately 50% and over 200%, respectively, driven by the premium for scarce computing power. However, institutional investors warn that once new computing capacity comes online on a large scale and rental pricing returns to normal, the high-debt, high-pricing models of these latter companies will face severe tests. ## Hyperscalers Regain Institutional Favor The strong rebound in cloud computing demand is the core logic behind institutional accumulation. Brian Barbetta, Co-Head of the Technology Platform at Wellington Management, stated that hyperscalers are being recognized by the market as significant beneficiaries of the AI paradigm shift. "They remain core holdings in our portfolio; in fact, we have recently increased our allocations to several such companies." Richard Clode, Fund Manager at Bankers Investment Trust under Janus Henderson, listed Amazon as one of his fund's largest overweight positions, summarizing his investment logic as "today's capital expenditure is tomorrow's sales revenue." He expects that by late next year through 2028, the growth rates of profits and cash flows for these companies will begin to exceed the incremental growth rate of capital expenditures. According to Reuters estimates, **the annual operating cash flow of hyperscalers in 2027 is expected to increase by approximately $340 billion compared to 2025, while capital expenditures during the same period are projected to rise by about $534 billion. The continued release of cash flow returns is a key basis for institutions maintaining their overweight positions.** ## Chips and Cloud: Not an Either-Or Choice Some investors emphasize that AI investment should not be simplified into a binary opposition between semiconductors and cloud computing. John Lamb, Director of Equity Investments at Capital Group, pointed out that investors should view AI as an expanding ecosystem. "The question is not whether chips are a better investment than hyperscalers, but that both should be included in your portfolio." Lamb also reminded investors that it typically takes 12 to 18 months for data centers to go from construction to revenue generation. "We are just beginning to see this inflection point in the latest quarterly reports." This means that the conversion of current capital expenditures into revenue is still in its early stages, and investors need to remain patient. Valuations for hyperscalers have compressed from their highs and remain below post-pandemic peak levels. Among them, Microsoft trades at the highest forward P/E ratio of approximately 24.6x, while Meta is at the lowest with around 17.6x. These relatively reasonable valuations provide room for institutions to continue building positions. ## Compute Leasing Companies: Dividends May Erode The high prosperity of neocloud service providers is built on the premium for scarce computing power, a foundation that is now shaking. Noah Weisenberger, Chief US Equity Strategist at BCA Research, pointed out that **once new computing capacity comes online on a large scale and market pricing normalizes, compute leasing companies that rely heavily on debt financing and high pricing will face significant risks.** Based on this, Weisenberger recommends a paired trading strategy of "going long on hyperscalers and shorting neocloud providers." He also noted that the transition of hyperscalers to a capital-intensive business model, even if profitability remains strong, may impose certain constraints on their valuations. Clode elaborated on the competitive moat of hyperscalers from the perspective of the competitive landscape: Companies that control both computing resources and possess platform capabilities to help customers efficiently deploy AI across models, optimizing costs and performance, will form more lasting competitive advantages. Amazon, Microsoft, and Google possess these traits precisely due to their scale and customer relationships, whereas neocloud providers pale in comparison. ## Winners Are Bound to Be Scarce Even while bullish on the long-term prospects of AI, institutions remain clear-eyed about the high barriers to current investments. Alberto Conca, Chief Investment Officer at Swiss wealth management firm LGF+ZEST, estimates that AI monetization levels need to increase by 5 to 13 times to support current spending plans. Barbetta expects that as the market matures, competition will further weed out players. The ultimate winners will be those with the broadest technology portfolios, the deepest customer relationships, and the strongest control over their own infrastructure, while highly specialized competitors may fall behind in the competition. **"The winners of the future will definitely be far fewer than today's market participants," he said.** ### Related Stocks - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [AMZU.US](https://longbridge.com/en/quote/AMZU.US.md) - [MSFL.US](https://longbridge.com/en/quote/MSFL.US.md) - [MSFO.US](https://longbridge.com/en/quote/MSFO.US.md) - [MSFX.US](https://longbridge.com/en/quote/MSFX.US.md) - [MSFD.US](https://longbridge.com/en/quote/MSFD.US.md) - [AMZW.US](https://longbridge.com/en/quote/AMZW.US.md) - [AMZZ.US](https://longbridge.com/en/quote/AMZZ.US.md) - [MSFU.US](https://longbridge.com/en/quote/MSFU.US.md) - [MSFW.US](https://longbridge.com/en/quote/MSFW.US.md) - [MSFY.US](https://longbridge.com/en/quote/MSFY.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [AMZD.US](https://longbridge.com/en/quote/AMZD.US.md) - [AMZO.US](https://longbridge.com/en/quote/AMZO.US.md) - [AMZY.US](https://longbridge.com/en/quote/AMZY.US.md) - [AZYY.US](https://longbridge.com/en/quote/AZYY.US.md) - [AMZP.US](https://longbridge.com/en/quote/AMZP.US.md) - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [CRWV.US](https://longbridge.com/en/quote/CRWV.US.md) - [NBIS.US](https://longbridge.com/en/quote/NBIS.US.md) - [JHG.US](https://longbridge.com/en/quote/JHG.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) ## Related News & Research - [A Recent Email Within Microsoft Seems to Confirm What Many Suspected: Tech Companies Are Overspending on AI](https://longbridge.com/en/news/295546786.md) - [LinkedIn Just Cut Its Israel R&D Team. 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