The economist stated that the AI buildout is the new industrial revolution and this has resulted in the prices of legacy assets, or old chips, rising in value because of the intense demand.
- Siegel was referring to Huang’s interview last week with CNBC, where the Nvidia chief stated that the largest infrastructure buildout in humanity’s history was justified and sustainable.
- Huang stated that AI companies and hyperscalers can capitalize on the “sky high” demand for computing power to make money.
- Siegel said that investors are skeptical of the soaring AI capex, which was visible as several “Magnificent 7” stocks cracked last week.
Jeremy Siegel, professor emeritus of finance at the University of Pennsylvania’s Wharton School of Business, on Tuesday said that he believes Nvidia Corp. (NVDA) CEO Jensen Huang is right about AI chip demand.
The economist stated that the AI buildout is the new industrial revolution and this has resulted in the prices of legacy assets, or old chips, rising in value because of the intense demand.
“Yet, investors are asking the right questions. When companies talk about $200 billion in capital expenditures, markets should scrutinize payback periods, competitive dynamics, and whether durable moats can be built in an environment where technology is evolving at breakneck speed,” he said.
Last week, Amazon.com Inc. (AMZN) laid out a $200 billion capital expenditure plan for 2026, which is an increase of over 50% compared to its 2025 capex. The company cited strong demand for its existing offerings and opportunities like AI, chips, robotics, and low Earth orbit satellites.
Huang Says AI Capex Surge Is Justified
Siegel was referring to Huang’s interview last week with CNBC, where the Nvidia chief stated that the largest infrastructure buildout in humanity’s history was justified and sustainable.
″The reason for that is because all of these companies’ cash flows are going to start rising,” Huang said.
He stated that AI companies and hyperscalers can capitalize on the “sky high” demand for computing power to make money. “Anthropic is making great money. OpenAI is making great money. If they could have twice as much compute, the revenues would go up four times as much,” he added.
Rotation Out Of Mega-Cap Tech Stocks
Meanwhile, Siegel said that investors are skeptical of the soaring AI capex, which was visible as several “Magnificent 7” stocks cracked last week. Amazon shares fell nearly 15% in the previous five trading sessions, while Alphabet’s Class A shares declined around 7%. Meta and Microsoft fell 4% and 2%, respectively.
“This is not a market being propped up by only a handful of mega-cap technology names. The rotation is real, it is persistent, and it is healthy,” he added. The economist said that the leadership rotation will continue amid these investor concerns.
Pullback In Gold, Silver Not A Fundamental Breakdown
Siegel also said that the recent decline in prices of gold and silver is a classic case of a pullback toward the trend rather than a fundamental breakdown.
He added that the longer-term trend lines in gold and silver remain intact. “Whether recent highs prove to be multi-year peaks like 1980 is unknowable, but nothing in the price action suggests a structural end to the story,” he said.
While spot gold prices fell to as low as $4,666 per troy ounce after scaling an all-time high of $5,595, spot silver prices are currently down more than 3% over the past week. However, from a record high of $121.67 per troy ounce, spot silver prices are down nearly 32%.
Meanwhile, U.S. equities gained in Tuesday’s pre-market trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.11%, the Invesco QQQ Trust ETF (QQQ) rose 0.08%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) gained 0.13%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.
The iShares 20+ Year Treasury Bond ETF (TLT) was up by 0.32% at the time of writing, while the iShares 7-10 Year Treasury Bond ETF (IEF) rose 0.11%.
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