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AI capital spending reportedly runs 50% above forecasts in 2026, against 20% for revenue

A post cites Bank of America research: hyperscalers’ weighted average cost of capital rose from 4% in 2023 to 10%.

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TLDR

A post summarizing Bank of America research says AI capital spending is running 50% above forecasts in 2026, against 20% for revenue. The research projects capital spending by the top five hyperscalers and neoclouds at $956 billion in 2026, $1.32 trillion in 2027 and $1.5 trillion in 2028. It estimates that 212 GW of new data center capacity from 2026 to 2030 would cost about $9.5 trillion, $2.1 trillion above the current capex forecast.

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@rohanpaul_aiBank of America’s new research finds AI capital spending running 50% above forecasts this year while revenue runs only 20% above, and that mismatch drives the rest of its analysis. Hyperscalers’ weighted average cost of capital has risen from 4% in 2023 to 10%, as risk-free rates sit more than 4% above pandemic lows and debt costs, equity costs and betas have all climbed. The BoA research still projects capex for the top 5 hyperscalers plus neoclouds at $956B in 2026, $1.32T in 2027 and $1.5T in 2028, which works out to growth of 38% and then 14%. Its demand math puts 212GW of new data center capacity between 2026 and 2030 at about $9.5T, $2.1T above the current $7.4T capex forecast.2h

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Today's Rank

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1 Source

@rohanpaul_aiBank of America’s new research finds AI capital spending running 50% above forecasts this year while revenue runs only 20% above, and that mismatch drives the rest of its analysis. Hyperscalers’ weighted average cost of capital has risen from 4% in 2023 to 10%, as risk-free rates sit more than 4% above pandemic lows and debt costs, equity costs and betas have all climbed. The BoA research still projects capex for the top 5 hyperscalers plus neoclouds at $956B in 2026, $1.32T in 2027 and $1.5T in 2028, which works out to growth of 38% and then 14%. Its demand math puts 212GW of new data center capacity between 2026 and 2030 at about $9.5T, $2.1T above the current $7.4T capex forecast.2h

1 Source

@rohanpaul_aiBank of America’s new research finds AI capital spending running 50% above forecasts this year while revenue runs only 20% above, and that mismatch drives the rest of its analysis. Hyperscalers’ weighted average cost of capital has risen from 4% in 2023 to 10%, as risk-free rates sit more than 4% above pandemic lows and debt costs, equity costs and betas have all climbed. The BoA research still projects capex for the top 5 hyperscalers plus neoclouds at $956B in 2026, $1.32T in 2027 and $1.5T in 2028, which works out to growth of 38% and then 14%. Its demand math puts 212GW of new data center capacity between 2026 and 2030 at about $9.5T, $2.1T above the current $7.4T capex forecast.2h

1 Source

@rohanpaul_aiBank of America’s new research finds AI capital spending running 50% above forecasts this year while revenue runs only 20% above, and that mismatch drives the rest of its analysis. Hyperscalers’ weighted average cost of capital has risen from 4% in 2023 to 10%, as risk-free rates sit more than 4% above pandemic lows and debt costs, equity costs and betas have all climbed. The BoA research still projects capex for the top 5 hyperscalers plus neoclouds at $956B in 2026, $1.32T in 2027 and $1.5T in 2028, which works out to growth of 38% and then 14%. Its demand math puts 212GW of new data center capacity between 2026 and 2030 at about $9.5T, $2.1T above the current $7.4T capex forecast.2h