If you think AI capex is insane this year, wait until 2027 as BofA sees a nearly 50% rise

Bank of America raised its estimates for hyperscaler AI capital spending after Q2 earnings from Alphabet, Microsoft, Amazon and Meta, arguing the AI buildout is still accelerating rather than peaking. It now sees 2026 hyperscaler capex above $860 billion, roughly 80% higher year over year, with a path toward $1.2 trillion in 2027, another 38% increase. The article says this spending is supported by a massive $2.3 trillion backlog in cloud commitments, improving funding visibility for the big cloud providers. While free cash flow margins may turn negative in 2026-2028, the market implication is continued demand for compute, memory, semis, power semis and optics. Pre-market, Micron and Nvidia rose, reflecting optimism that AI infrastructure spending will keep benefiting hardware suppliers.