Hedgeye Podcasts AI Capex - Back to Infrastructure | Protect the Pile: Episode 7
Feb 28, 2026
Jay Van Sciver, an Industrials analyst focused on infrastructure and energy, joins to unpack AI-driven capex. They explore how AI shifts demand to data centers, chips, and power. Conversation hits hyperscaler spending, grid strain from electrification, transport and tariff risks, plus sizing strategies for earnings volatility.
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AI Is Driving A Capital Shift To Heavy Infrastructure
- AI investments are shifting capital from low-capex software to asset-heavy infrastructure like data centers, chips, and power capacity.
- Hyperscalers’ capex is growing faster than revenue, forcing a reallocation toward physical “stuff” and grid expansion that benefits industrials like GE and Siemens.
AI Agents Threaten Software Margins
- Software’s terminal value is being questioned as AI agents compress margins and change pricing models.
- Embedding LLM token costs into products risks margin compression and forces software firms to rethink monetization and long-term value.
Capital Reallocation From Software To Industrials
- Capital flows are moving from high-return, low-capex businesses to more capex-intensive segments as returns on software decline.
- That rebalancing lifts industrial suppliers, chip fabs, and energy providers who supply the physical backbone of AI.
