BCA upgrade equities, downgrades cash as AI boom continues

BCA Research has raised its stance on equities and downgraded cash, citing an AI-led investment boom as the primary driver of growth despite consumer strains from the Strait of Hormuz closure. The firm highlights more than $400bn invested by hyperscalers in data centres over the past 12 months and a jump in combined remaining performance obligations at Alphabet, Microsoft and Amazon from $596bn in Q1 2025 to $1.5tn in Q1 2026. BCA upgraded U.S. equities to neutral, cut EU equities to underweight and trimmed Australia to neutral, while moving Communication Services to overweight (naming Meta and Google as top AI plays). The note says subdued positioning and policy sensitivity create asymmetric upside for markets, suggesting continued upside risk for AI-related stocks and sector-led equity leadership.