Bank of America analysts maintained a bullish outlook on capital expenditures related to data centers and artificial intelligence in a recent Friday note, citing robust spending indicators from various U.S. hyperscalers.

Key Highlights on AI Capital Spending

• Q1 Expenditure: Hyperscaler spending reached $92.0 billion, slightly falling short of estimates of $93.8 billion.

• BofA projects total AI capex to skyrocket to $414 billion in 2025, reflecting a 44% increase from the previous year’s spending, with $432 billion forecasted for 2026.

• Top Picks for Investors: The preferred stock suggestions are Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO), with AMD (NASDAQ:AMD) and Marvell Technology (NASDAQ:MRVL) highlighted as promising secondary options.

Hyperscaler Commitment

• Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) reaffirmed their commitment to 2025 expenditures.

• Meta (NASDAQ:META) elevated its guidance to $64-$72 billion, an increase from previous projections.

• Amazon (NASDAQ:AMZN) retained its $105 billion capex forecast while Marvell experienced growth from AWS and others.

Despite concerns that China’s DeepSeek AI launch might divert funding to more efficient models, BofA believes that overall capex momentum remains sound as hyperscalers continue to expand their AI capabilities.

Valuation Context for Investors

With anticipated AI-driven spending set to surge, it is essential for investors to assess chipmaker valuations against sector growth. Evaluating current semiconductor valuations is crucial for determining whether leading AI stocks still present attractive entry points for investment.