Bank of America: Raises earnings target for US stocks AI brings a "positive investment cycle" to technology giants

Analysts at Bank of America believe that thanks to artificial intelligence, large companies will enter a "virtuous investment cycle". According to the S&P 500 earnings outlook report released by Bank of America on Tuesday, it is estimated that by 2024, the capital expenditures of mega-cap companies such as Microsoft (MSFT.US), Amazon (AMZN.US), Alphabet (GOOGL.US), and Meta Platforms (META.US) will reach $180 billion, a 27% increase year-on-year. Bank of America has also raised its S&P 500 earnings target for 2024 to $250 per share, a 12% increase year-on-year, and has raised its 2025 earnings target to $275 per share. This is the highest forecast on Wall Street. The report states that capital expenditure expectations are expected to increase by $38 billion year-on-year, accounting for approximately 80% of the expected earnings growth. Analysts stated, "History indicates that companies in a reinvestment cycle (such as this one) typically underperform, but we see potential for a virtuous cycle in AI investments." This comes after more than a decade of underinvestment. The most obvious beneficiaries are the semiconductor and networking technologies, "but the increase in power consumption and physical construction of data centers will lead to increased demand for electrification, utilities, commodities, etc." Additionally, the productivity improvements brought about by AI and domestic investments in the United States are also major driving forces.