Bank of America Says Investors Are Overplaying AI and Underestimating Consumers

AI summary of the source article

Bank of America strategists led by Savita Subramaniam recommend that investors selectively pivot from artificial intelligence capital expenditures toward consumer spending, warning against underestimating U.S. consumer appetite. The strategists noted that AI spending is already heavily priced in, leaving disruptees such as software, IT services, and consumer finance near record lows relative to industrials. The advice comes as Goldman Sachs forecasts AI infrastructure capex by the five largest U.S. hyperscalers will expand from $800 billion this year to $1.2 trillion in 2027. Concurrently, reports from PYMNTS and Visa show consumers continue discretionary spending by adjusting habits and leveraging digital commerce.

Why it matters

The analysis suggests market expectations around AI capital spending may be fully priced in, signaling a potential rotation back into undervalued consumer and financial sectors.

Key facts

• Bank of America strategists stated that capex strength is largely priced into markets while consumer finance and software stocks sit near record lows.
• Goldman Sachs estimates AI infrastructure spending by the top five U.S. hyperscalers will rise from $800 billion this year to $1.2 trillion in 2027.
• Visa data shows global consumers continue to make discretionary purchases by comparing prices and utilizing digital commerce.