Deepwater Asset Management‘s managing partner Gene Munster said Monday Samsung Electronics and SK Hynix‘s planned $590 billion investment in chip manufacturing is the bigger story for artificial intelligence, with the spending underscoring how early the AI infrastructure buildout remains.
Samsung, SK Hynix Spending In Focus
In a post on X, Munster said Google parent Alphabet Inc‘s (NASDAQ:GOOGL) (NASDAQ:GOOG) addition to the Dow Jones Industrial Average may have grabbed headlines, but the “real story” is the capital expenditure plans announced by Samsung Electronics and SK Hynix.
The South Korean government announced Monday that Samsung and SK Hynix will build new semiconductor fabrication facilities in the country’s southwest as part of a national initiative to create a chip manufacturing ecosystem and strengthen its position in the AI era.
Munster added that the companies’ $590 billion investment plan marks a roughly 48% step-up from the nearly $400 billion investors would have expected if capital spending had continued growing at about 20% annually.
AI Demand Still Outpaces Supply
Speaking on CNBC‘s Closing Bell, Munster said the AI industry remains “massively supply constrained,” adding that he views those constraints as a positive sign for the broader AI trade.
Last week, Wedbush analyst Dan Ives, said that AI demand continues to significantly outpace supply and that the recent sector selloff does not reflect weakening demand for memory chips.
According to Munster, investors remain focused on whether rising AI investment will translate into stronger revenue growth rather than short-term earnings.
“Our job is to figure out what revenue growth is going to be in six and twelve months. It’s not about the June quarter,” he added.
Capex Becomes Wall Street’s Biggest Question
He said Google’s higher capital spending has become a key focus for investors, with Wall Street now expecting the company’s capital expenditures to grow about 30% in calendar 2027, up from previous expectations of around 20%.
“There’s just still this bigger question that the investors are asking… the sustainability and ultimately when the return on investment is, with this massive spend,” Munster said.
Price Action: Google closed 4.96% higher on Monday at $351.28 and fell 0.13% in extended trading.
Benzinga edge rankings indicate GOOG has a Momentum score in the 86th percentile and a Growth score in the 89th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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