If you think AI capex is insane this year, wait until 2027 as BofA sees a nearly 50% rise
If you were waiting for the AI capex cycle to cool, keep waiting. Bank of America has updated its numbers after Q2 earnings from the four big US hyperscalers — Alphabet, Microsoft, Amazon and Meta — and the trajectory is steeper, not flatter.
The bank now sees CY26 hyperscaler capex above $860 billion, up roughly 80% year-over-year, with a "path" toward $1.2 trillion next year, another 38% on top of that. Those are almost unfathomable numbers. Compute remains supply constrained and every management team pointed to stronger multi-year spending intentions.
"We see increased hyperscaler appetete to continue investing in capacity," BofA writes.
The number that matters most is $2.3 trillion. That's the backlog of customer cloud commitments across the top four cloud providers, up 16% quarter-over-quarter from $2.0 trillion in early July. Microsoft alone disclosed $678 billion in commercial backlogs; Oracle sits at $638 billion, and its ~$75bn in prepaid hardware contracts is quietly de-risking its funding picture. This is the answer to the "who pays for all this?" question — increasingly, customers are, in advance.
The bear case has always been free cash flow, and BofA doesn't dodge it. Aggregate FCF margins go negative around -1% in CY26 and bottom near -5-6% in CY27-28 versus a historical +15-20%. That's a real drawdown. But AI sales are growing triple-digits — AWS says AI and chip revenues each cleared $25 billion annually — and cloud/AI margins are expanding ahead of plan. In terms of the market, the question remains the same: Will the spending pay off? With the rise in capex, the stakes get even higher.
On funding, the top five have raised ~$270 billion since the start of 2026, mostly long-dated debt out to 30-40 years. BofA says "capital market access remains favorable" and that free cash flow could be huge on the other side of the build out.
For now, they say compute, memory, semicaps, power semis and optics (in that order) stay bid as the spending continues. On that note, the memory names are up big in today's premarket with DRAM ETF up 4.4%, Micron up 5.2% and Nvidia up 1.7%.
This article was written by Adam Button at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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