Should AI Spending Worry Investors?

Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley, discusses the debate around elevated capital expenditure in AI technology, addressing concerns that it might show classic warning signs of overbuilding and credit worries. He argues that the AI CapEx cycle has much further to run, citing that most expected spending is still ahead, major profitable companies are driving the investment, these companies have strong balance sheets, and current demand for data centers remains robust, unlike prior cycles that suffered from overcapacity built ahead of demand.