AI Spending is Beginning to Payoff

Core Insights - Major tech companies are investing billions in AI operations, with potential payoffs on the horizon as indicated by recent research from Alger [1][4] - The five largest AI hyperscalers (Microsoft, Amazon, Meta, Alphabet, and Oracle) are projected to see a slowdown in CapEx growth while operating cash flow is expected to increase steadily [2] Group 1: AI Investment Trends - Significant capital expenditure (CapEx) is being directed towards AI, but the growth rate is expected to slow in the coming years [2] - Companies like Microsoft and Meta are already reporting AI as a notable contributor to their revenue growth as of June 2025 [4] Group 2: Investment Opportunities - Investors are encouraged to gain exposure to a variety of AI-related companies, including those involved in AI infrastructure and implementation [5] - The Alger AI Enablers & Adopters ETF (ALAI) offers diversified exposure to companies positioned to benefit from rising AI adoption, including firms like AppLovin, TSMC, and Talen Energy [6] Group 3: Investment Strategy - ALAI employs a fundamental, bottom-up approach to select high conviction stocks, focusing on companies with high unit volume growth or positive life cycle changes [7] - The strategy aims to capitalize on the broadening adoption of AI across various sectors, including traditionally less dynamic industries like Industrials and Utilities [7][8]