Bank of America warns investors of diminishing returns from AI spending

The AI trade made plenty of investors look brilliant. Bank of America strategists think the effortless part of that story is ending. BofA’s strategists say investors will have a harder time pulling easy gains out of AI-related investments. The warning comes as the biggest spenders on AI infrastructure keep writing larger checks while the market grows less certain those checks will pay off. The numbers behind the caution Start with the spending. BofA projected US hyperscaler capital expenditure at around $795 billion in 2026 and nearly $1.08 trillion in 2027. Hyperscalers are the giant cloud operators, names like Microsoft, Alphabet and Amazon. Capex is the money they pour into physical infrastructure, the data centers and hardware that AI models need to run. The stock market has not been cheering. By June 2026, US hyperscalers were trailing the S&P 500 by nearly 15% year-to-date. BofA read that underperformance as a sign of doubt about whether the expected returns on all that investment will materialize. A BofA equity strategy note from that same month warned that the AI-driven stock rally might be losing momentum. The note also pointed out that corporates are rationing their A...