BofA expects annual AI investments to nearly triple between CY25-30E to over $1.2T

Bank of America analysts project annual artificial intelligence capital spending to nearly triple to over $1.2 trillion by 2030, citing robust funding from hyperscalers and governments, alongside drivers like infrastructure upgrades and enterprise adoption. The firm raised its cloud capex tracker, forecasting top public cloud vendors' spending to reach $528 billion, up 19% YoY, which significantly benefits chip companies like Nvidia and semiconductor equipment providers such as Lam Research.

Analysis

Bank of America analysts have issued a highly bullish outlook on artificial intelligence capital spending, forecasting annual investments will nearly triple to over $1.2 trillion by 2030. This projection is underpinned by an upward revision to the firm's cloud capex tracker, which now anticipates top public cloud vendors will spend $528 billion, reflecting a 19% year-over-year increase, revised up from a prior estimate of 16% growth. The report identifies four primary growth drivers: upgrading traditional infrastructure, defending competitive moats in sectors like search and e-commerce, sovereign AI build-outs, and enterprise adoption of AI tools. Crucially, the analysts view this investment cycle as more resilient than past ones, as it is funded by the substantial cash flows of hyperscalers—with capex equal to 25% of sales being well-covered by operating cash flows exceeding 30%—and government buyers, without requiring costly consumer device upgrades. The report dismisses concerns over vendor financing, framing Nvidia's $100 billion commitment to OpenAI as a catalyst for further investment. Key beneficiaries cited as well-positioned to capture this spending growth include chip companies like Nvidia, Broadcom, AMD, Marvell, and Credo, alongside semiconductor equipment vendors such as Lam Research and KLA.

Key Decisions for Investors

• Investors should review portfolio exposure to the AI infrastructure supply chain, focusing on the semiconductor companies (NVDA, AVGO, AMD, MRVL, CRDO) and equipment vendors (LRCX, KLAC) explicitly identified as primary beneficiaries of the projected surge in capex.
• Given the report's emphasis on a resilient, multi-year spending cycle funded by strong hyperscaler cash flows and sovereign interests, this theme may be approached as a long-term strategic allocation rather than a short-term tactical trade.
• Closely monitor upcoming capex guidance from major cloud providers, as their spending levels serve as the primary validation metric for Bank of America's thesis, which was recently supported by an upward forecast revision to $528 billion in spending.