【Wall Street Dried-Up Research Reports】 Is Here! Plain-English Interpretation of Big Bank Views, Condensed Frontline Judgments
On July 31, 2026, JPMorgan Chase released a report titled “Mega-Scale Compute Providers = Super Growth,” arguing that it is time to buy mega-scale compute providers (referring to cloud giants such as Microsoft, Amazon, and Google). The report provides three reasons and notes that the AI investment focus is spreading from the hardware supply chain to leading cloud service providers.
Three Reasons to Buy:
Record Backlog Orders: The total order backlog of Microsoft, Amazon, and Google Cloud reached $1.7 trillion, up 152% year over year. Their growth rate has already surpassed their capital expenditure growth rate, providing a high degree of revenue certainty for the future.
Capex Intensity Peaks: In 2026, the four largest U.S. cloud service providers’ capital expenditures are expected to surge 97% year over year to $366 billion, but growth is likely to slow in 2027. As revenue growth outpaces spending growth, the industry will enter a “positive operating leverage” phase, and profit margins are expected to expand.
Valuations Lag, Leaving Catch-Up Potential: The three giants’ average EV/EBITDA is only 11.5x, significantly underperforming the Philadelphia Semiconductor Index (SOX). Once AI monetization capability is validated, market attention should shift from capital expenditure to applications and monetization. The return gap between compute providers and the semiconductor sector is likely to narrow.
The recovery of mega-scale compute providers signals that AI investing has entered a new stage—from simply “capital expenditure transactions” to “monetization and returns transactions.” This is good not only for compute providers, but also for the broader AI supply chain: only if compute providers successfully monetize can the entire AI capex cycle remain sustainable. Investors should expect more balanced returns between the AI supply chain and mega-scale compute providers.
（Risk Reminder: The viewpoints mentioned are for learning and communication only and do not constitute a basis for any recommendation.）$GOOG.US
On July 31, 2026, JPMorgan Chase released a report titled “Mega-Scale Compute Providers = Super Growth,” arguing that it is time to buy mega-scale compute providers (referring to cloud giants such as Microsoft, Amazon, and Google). The report provides three reasons and notes that the AI investment focus is spreading from the hardware supply chain to leading cloud service providers.
Three Reasons to Buy:
Record Backlog Orders: The total order backlog of Microsoft, Amazon, and Google Cloud reached $1.7 trillion, up 152% year over year. Their growth rate has already surpassed their capital expenditure growth rate, providing a high degree of revenue certainty for the future.
Capex Intensity Peaks: In 2026, the four largest U.S. cloud service providers’ capital expenditures are expected to surge 97% year over year to $366 billion, but growth is likely to slow in 2027. As revenue growth outpaces spending growth, the industry will enter a “positive operating leverage” phase, and profit margins are expected to expand.
Valuations Lag, Leaving Catch-Up Potential: The three giants’ average EV/EBITDA is only 11.5x, significantly underperforming the Philadelphia Semiconductor Index (SOX). Once AI monetization capability is validated, market attention should shift from capital expenditure to applications and monetization. The return gap between compute providers and the semiconductor sector is likely to narrow.
The recovery of mega-scale compute providers signals that AI investing has entered a new stage—from simply “capital expenditure transactions” to “monetization and returns transactions.” This is good not only for compute providers, but also for the broader AI supply chain: only if compute providers successfully monetize can the entire AI capex cycle remain sustainable. Investors should expect more balanced returns between the AI supply chain and mega-scale compute providers.
（Risk Reminder: The viewpoints mentioned are for learning and communication only and do not constitute a basis for any recommendation.）$GOOG.US