The biggest US spenders on artificial intelligence are gaining popularity again as investors dump expensive chipmakers. For Societe Generale SA's Manish Kabra, that rotation is unlikely to last.

Kabra, SocGen's head of US equity strategy, said the cohort known as hyperscalers is still burning through cash at a rate that's raised concerns about whether all that spending will pay off.

The strategist noted that while hyperscalers have seen renewed investor interest, their massive capital expenditure on AI infrastructure remains a key risk factor. Current valuation levels may not adequately reflect the uncertainty around return on investment timelines.

Market observers should monitor quarterly earnings for signs of AI revenue materialization before committing to these names. The rotation away from chipmakers toward hyperscalers appears premature given the fundamental cash burn dynamics.