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AI spending worries shift focus to pick-and-shovel stocks

The Jefferies strategist argues hyperscalers’ upfront capex can support pick-and-shovel companies even as the payoff from AI spend may take years to show up.

Reported · Written up by our desk · Sectors

As concerns about the pace and payoff of AI spending grow, a veteran Jefferies strategist says investors should consider “pick-and-shovel” beneficiaries that capitalize on hyperscalers’ early infrastructure spending, MarketWatch reports.

The strategist’s view is that companies supplying parts of the build, which get funded sooner through hyperscaler capex, can see support in the near term.

By contrast, he suggests that businesses directly spending the money on AI may face a longer wait before investors can judge whether those investments will ultimately generate returns, since the results could show up years later.

MarketWatch frames the idea around an upcoming critical stress test, implying investors are weighing how quickly spending turns into measurable benefits.

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