Dan Niles of Niles Investment Management said the market's AI leadership is rotating from companies spending on infrastructure to the suppliers receiving that spending. The thesis comes as AI stocks sell off and Apple's cautious approach to AI capex appears validated. Niles made the comments Monday on CNBC's "The Exchange."
The market's AI leadership is rotating from big-tech spenders to the companies supplying their infrastructure, Dan Niles said Monday.
"We're getting back to where AI capex is being spent, not the spenders," Niles, founder of Niles Investment Management, said on CNBC's "The Exchange."
The thesis comes as AI-related stocks have sold off in recent weeks, with Apple Inc.'s decision to largely sit out the AI spending arms race suddenly looking prescient, according to a recent analysis. Niles' framework suggests that suppliers of AI infrastructure — chip makers, data center operators and energy providers — stand to benefit as hyperscalers continue their heavy capital expenditure.
The rotation reflects a maturing AI investment cycle where the initial phase of owning the companies building AI models gives way to owning the companies that supply them. For investors, this could mean reallocating from mega-cap tech toward semiconductor, data center and utility stocks.
Niles also commented on SpaceX's performance during the interview, though he did not provide specific investment recommendations related to the private space company.
The shift mirrors patterns seen in previous technology cycles, where infrastructure builders initially capture investor attention before the supply chain takes over as the primary value driver. Apple's relative restraint on AI spending — which once drew criticism from investors expecting a more aggressive push — has been validated as the sector corrects.
This article is for informational purposes only and does not constitute investment advice.
