# AI Trade Reset Needed But Infrastructure Spending Still Early **Published:** 2026-01-15 **Source:** https://www.startuphub.ai/ai-news/ai-video/2026/ai-trade-reset-needed-but-infrastructure-spending-still-early --- “The AI trade is still alive and healthy,” asserted Doug Clinton, founder and CEO of Intelligent Alpha, in a recent appearance on CNBC’s Power Lunch, providing a sharp counter-narrative to the jitters that have plagued some high-flying tech names since the beginning of the year. Clinton, whose firm utilizes AI models to inform its stock selection, spoke with the anchors about the recent market "reset," the massive capital expenditure (CAPEX) push by Big Tech, and where value can still be found as the AI infrastructure buildout accelerates. The market correction seen late last year and early this year, particularly among some of the hottest AI stocks, was characterized by Clinton not as a failure of the theme, but as a necessary recalibration. This view was strongly reinforced by Taiwan Semiconductor Manufacturing Company’s (TSMC) recent earnings report, which acted as a powerful catalyst for the semiconductor sector. TSMC, a critical player in the foundational hardware layer of AI, signaled robust demand that belies any notion of a slowdown. The company guided capital expenditures to about 40% growth this year, a figure Clinton believes is conservative. This massive spending, driven primarily by the need to build out the AI infrastructure required to support generative models, is the core of Clinton’s bullish thesis. He noted that the Magnificent 7, the group of dominant tech companies driving the AI revolution, are expected to dramatically increase their capital spending. While consensus figures hover around 35% growth in new CAPEX this year, Clinton suggests that the actual number could be “closer to 50%.” The implication for investors is clear: we are still in the early innings of a massive, multi-year infrastructure cycle, which favors the companies building the physical capacity. The immediate beneficiaries of this infrastructure gold rush are the chip designers and manufacturers, such as TSMC and Nvidia (NVDA). However, the aggressive CAPEX has created a curious tension in the market, particularly concerning valuations. When companies spend heavily on infrastructure, their free cash flow (FCF) often suffers in the short term, making them appear expensive on traditional FCF multiples. Yet, Clinton argues that the market has to tolerate this massive spending because it is strategic and necessary for future dominance. The market is effectively rewarding the long-term vision over immediate cash flow generation. Within the Magnificent 7, Clinton pointed to specific pockets of overlooked value. While many of the group trade at lofty valuations, Amazon stands out. "If you look at their P/E on a forward basis, they're actually one of the lowest P/Es, kind of mid-20s, of the entire group now, which is almost unheard of if you look at Amazon over the last decade relative to this group," he observed. This relatively low valuation, coupled with Amazon Web Services (AWS) being a primary engine for AI deployment and infrastructure spending, makes it a compelling value play within an otherwise highly priced group. Clinton emphasized that Amazon represents the rare opportunity to find value within the Mag 7 while betting on the enduring AI theme. The dichotomy between hardware and software remains stark, defining the current investment landscape. Clinton highlighted the alarming performance gap visible just in the first few weeks of the year. Investors are enthusiastically pouring into the chip stocks while largely shunning enterprise software. This bifurcation stems from the market’s uncertainty about how quickly traditional software companies can monetize AI features and whether they face disruptive threats from new entrants. Illustrating this software malaise, Clinton pointed to the performance delta. “The delta of performance between chip stocks and software stocks is about 10% already,” he noted, contrasting this with the already significant 35% gap seen last year. This trend suggests that investors are finding it "sick to buy software right here," even though companies like Salesforce trade at a forward multiple of 18, a historical anomaly for a growth sector. While Intelligent Alpha’s models have started gravitating toward software names like Adobe, Service Now, and GitLab, suggesting a long-term belief in their eventual AI monetization, Clinton acknowledges the market’s current aversion. He believes that the narrative surrounding software will eventually shift as AI monetization ramps up, but that moment may still be several months away. The prevailing mentality is that the software transition will be slower and more painful than the infrastructure buildout, pushing capital toward the more certain immediate returns found in hardware. The overall message remains focused on the foundational strength of the AI trade. The recent market reset, far from signaling a bubble burst, has merely cleared some froth, allowing investors to refocus on the core thesis: massive infrastructure investment is accelerating, driven by the world’s largest and most powerful corporations. This buildout continues to favor chipmakers and providers of foundational cloud services, while software remains a longer-term, value-driven opportunity waiting for a clear monetization path to emerge. --- Original analysis from [startuphub.ai](https://www.startuphub.ai), the #1 AI startup directory. © StartupHub.ai. All rights reserved. You may not republish this article in full without a license. Search engines and AI research tools may crawl and summarize for reference. Bulk reproduction or model training on this content requires a license. See https://www.startuphub.ai/terms.