BofA expects hyperscale cloud capex to exceed $860bn in 2026 (up ~80% YoY) and
approach $1.2trn in 2027 (up ~38%). Microsoft, Oracle, AWS and Google report a
combined cloud backlog of more than $2.3trn, up 16% QoQ, providing high
visibility for future spend. The current AI infrastructure expansion will
chiefly boost demand for compute, storage, semiconductor equipment, power
semiconductors and optical communications. As AI agents and inference workloads
scale, server allocations of HBM, DRAM and SSDs should rise; storage demand
could outpace GPU shipments. Capex exceeding operating cash flow will compress
free cash flow at big tech firms, though they can access debt and equity
markets. BofA characterizes the cycle as a multi-year infrastructure build and
says rising cloud orders improve visibility on AI investment returns.
