Societe Generale strategist Manish Kabra’s team says recent extreme swings in
semiconductors and momentum trades reflect concentrated de-leveraging and hedge
fund unwind, not a synchronous weakening of AI fundamentals. They assess South
Korea’s most acute de-leveraging phase is nearing an end and US momentum
strategies have seen large-scale reductions. Hyperscaler cloud businesses remain
in a strong upcycle in the latest results cycle; order backlogs are up about 15%
and have pushed AI capital spending roughly 10% higher. The team expects AI
CapEx to continue accelerating into H2 2026, with a potential peak in H1 2027.
Societe Generale advises distinguishing trading-driven de-leveraging—which has
cooled—from the still-expanding industrial CapEx cycle; until hyperscaler free
cash flow materially improves, hardware, infrastructure and supply-chain
suppliers that directly capture AI CapEx are likely more direct beneficiaries
than high-spend customers.
