Bank of America Says Slower AI Spending Could Extend Chip Earnings Cycle

Bank of America analysts argue that slower growth in artificial intelligence infrastructure spending could extend chipmakers’ earnings cycle by reducing overbuilding while demand for AI services remains resilient. The analysts say slower capacity growth could improve utilization and pricing for chipmakers. The analysts cite growing cloud activity, heavier use of AI services and contracted backlogs totaling $2.5 trillion as signs of continued demand. They also expect hyperscalers’ cash burn to peak before narrowing. Projected free cash flow from Nvidia, Broadcom and Micron could help fund infrastructure investment, the analysts say.

Source: TokenPost