Bank of America has raised its earnings target for US stocks, bringing a "benign investment cycle" for tech giants with AI.
Large companies are expected to enter a "benign investment cycle". It is projected that by 2024, the capital expenditures of Microsoft, Amazon, Alphabet-C, and Meta Platforms will reach $180 billion, a 27% increase year-on-year. Bank of America has raised its earnings per share targets for the S&P 500 index in 2024 and 2025. Investments in artificial intelligence and domestic investment in the United States will lead to productivity improvements, benefiting semiconductor and network technologies. Additionally, there will be an increase in demand for electrification, utilities, and commodities. This investment may lead to a benign cycle, following more than a decade of underinvestment.
Zhitong App learned that analysts at Bank of America believe that thanks to artificial intelligence, large companies will usher in a "benign investment cycle." According to the Earnings Report released by the bank on Tuesday, it is projected that by 2024, the capital expenditures of mega-cap companies - Microsoft (MSFT.US), Amazon (AMZN.US), Alphabet (GOOGL.US), Meta Platforms (META.US) - will reach $180 billion, a YoY increase of 27%.
Bank of America has also raised the 2024 earnings per share target for Pro UltrPro Shrt S&Pro 500 to $250, a 12% increase YoY, and raised the 2025 earnings per share target to $275. This is the highest forecast on Wall Street. The report states that capital expenditure expectations are expected to increase by $38 billion YoY, accounting for about 80% of the expected earnings growth.
Analysts stated: "History has shown that companies in a reinvestment cycle (like this one) have performed poorly, but we see that investments in artificial intelligence may form a virtuous cycle." This comes after more than a decade of underinvestment.
The most obvious beneficiaries are the semiconductor and network technologies, "but the increase in power usage and the physical construction of data centers will lead to increased demand for electrification, utilities, commodities, and more." In addition, artificial intelligence and the productivity improvements brought about by domestic investments in the United States are also major driving forces.