Christopher Wood has a track record of spotting speculative bubbles. He called the dotcom boom, Japan’s credit bubble and the U.S. housing bubble before many of his contemporaries. So when he warned of an “AI capex arms race” at the Fortune Innovation Forum in Kuala Lumpur, Malaysia on Tuesday, the audience paid attention.
Wood, now the global head of equity strategy at Jefferies Hong Kong, said that the arms race began in 2023 when Microsoft invested in OpenAI. He argued that investors are missing a crucial point: That nearly all the money made so far is accruing not to the companies building AI products, but to those selling the infrastructure behind them.
“You want to own what I call the picks and shovels of AI,” Wood said. It’s companies like Nvidia, those producing semiconductors and building data centers, that have made real profits from the AI boom.
“But it’s completely unclear to me who’s going to monetize and make money out of all this capex,” Wood continued.
This sets up what he views as an almost-inevitable over-investment bust—though when markets finally lose patience with ballooning spending without results is unknown.
