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Investing.com -- Bank of America analysts said they remain bullish on artificial intelligence capital spending and forecast annual investments will “nearly triple between CY25-30E to over $1.2Tn+, constrained only by [the] ability to scale buildings and power.”
The firm highlighted four main drivers of the increase: “Upgrading trad. infrastructure to accelerated computing; Protecting existing moats in search, social, ecommerce, cloud services from being disrupted by likes of OpenAI, xAI, neoclouds; Sovereign builds-outs; and Steady enterprise adoption of AI productivity tools.”
BofA said the current AI infrastructure buildout is more resilient than past cycles because it is “funded by strong cash flows of hyperscalers and government buyers – top 5 US cloud providers alone will spend capex equal to 25% of sales CY25 sales, well covered by 30%+ operating cash flows – while AI adoption can happen without costly consumer device upgrades.”
The bank raised its cloud capex tracker, now seeing “$443bn/$528bn in capex from top public cloud vendors, up +58%/+19% YoY from +54%/+16% prior. Capex could 3x towards $1.2Tn+ by CY30E at current levels of 25-30% capex intensity.”
Chip companies such as Nvidia, Broadcom, AMD, Marvell, Credo, and semiconductor equipment vendors Lam Research and KLA were cited as well-positioned.
On concerns around vendor financing, BofA said Nvidia’s $100 billion commitment to OpenAI “should not be viewed as free money/GPUs” but instead as a force multiplier driving further hyperscaler investment.