AI spend well on track- BofA

Published 10/02/2025, 12:28
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Investing.com -- AI spend is well on track, according to Bank of America analysts who have revised their forecasts upward for the Big Tech capex dedicated to artificial intelligence. 

In a memo Monday, BofA noted, “Our aggregate capex tracker now points to an increase of +32% YoY to $363bn in CY25, up from +22% YoY to $326bn just two weeks ago.” 

The robust forecast is said to underscore the strong demand for frontier AI models, even as companies invest heavily in critical infrastructure.

The bank highlights that the mix of spending is increasingly skewed toward servers, including CPUs, GPUs, and ASICs, as firms look to expand their GPU and custom AI silicon adoption wherever possible. 

Despite concerns over a near-term decline in cloud sales and profitability, BofA remains optimistic. “The race for AGI would be critical in uncovering new opportunities (offensive) and maintaining competitiveness (defensive) for all,” the analysts stated.

Moreover, BofA stressed the importance of capex in sustaining a competitive edge, noting that cloud capex as a percentage of cash from operating activities is projected to reach 59% in 2025, 57% in 2026, and 51% in 2027. 

They compared this with historical levels—“while higher than the <40% level seen pre-2021, capex spend has already reached 51% of CFO in 2022 prior to the full-scale AI infra deployment of today.” They further referenced the resilience of US telco capex, which has consistently ranged between 45% and 60% over the last decade.

As a result of the developments, BofA maintains a positive view on the overall AI spending environment, emphasizing that the long-term prospects for AI are bolstered by solid adoption trends and ongoing investments. 

The firm said it continues to back leading AI plays, maintaining Buy ratings on NVDA, AVGO, and MRVL. Overall, BofA’s analysis supports the view that robust AI capex will be a key driver for growth in the coming years, helping companies secure a competitive advantage in the rapidly evolving tech landscape.

 

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