Bank of America said that the days of hype about artificial intelligence are over as the market shifts towards evaluating investment returns.
This week, tech giants including Microsoft and Amazon will release quarterly earnings reports, with a further focus on the theme of artificial intelligence. Bank of America said that the market is now shifting towards evaluating the returns on investment in this rapidly developing technology. She said, 'As AI transitions from 'tell me' to 'show me,' those companies that clearly monetize AI are likely to start leading the way.'$Microsoft (MSFT.US)$Bank of America's head of US stocks and quantitative strategy, Savita Subramanian, said the investment cycle for AI may continue, 'but the days of AI hype are over.' She noted that the market has been in the 'tell me' stage about AI over the past 12 months and highlighted Microsoft and Amazon as examples of companies that monetize AI, with both companies' stocks rising after recent earnings reports.
Bank of America's Subramanian said that historically, companies in the reinvestment cycle tend to underperform. $ServiceNow (NOW.US)$And$Adobe (ADBE.US)$As examples of companies that monetize AI, the stocks of both Microsoft and Amazon have risen after their latest earnings reports.
According to a report by Bank of America, the expected capital expenditures of so-called hyperscale firms such as Microsoft and Amazon in the field of AI have been revised up by $18 billion, while sales forecasts have only increased by $2 billion since March. In other words, for every $1 of sales growth, AI capital expenditures are set to increase by $9. $Meta Platforms (META.US)$And.$Amazon (AMZN.US)$By 2024, capital expenditure growth for hyperscale firms such as Facebook, Microsoft, Meta, and Amazon is expected to account for the bulk of capital expenditure growth, reaching $198 billion. Subramanian said that historically, companies in the reinvestment cycle tend to underperform.
In 2024, large-scale enterprises$Alphabet-A (GOOGL.US)$Microsoft, Meta, and Amazon's expected capital expenditure growth in the field of AI is expected to account for the bulk of capital expenditure growth, reaching $198 billion. $S&P 500 Index (.SPX.US)$Subramanian said that historically, companies in the reinvestment cycle tend to underperform.
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