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AI-focused tech giants are entering a 'virtuous cycle' of spending that will see their profits explode, BofA says

AI-focused tech giants are entering a 'virtuous cycle' of spending that will see their profits explode, BofA says
  • A virtuous investment cycle sparked by AI is set to drive S&P 500 profits to record highs, according to Bank of America.

  • The bank raised its 2024 and 2025 S&P 500 earnings per share estimates to $250 and $275, respectively.

  • Corporate investments in AI technologies will eventually spill over into utilities as electricity demand rises, BofA said.


The stock market is about to enter a "virtuous investment cycle" that leads to record corporate profits, according to a Tuesday note from Bank of America.

Strategist Savita Subramanian said corporate investments in artificial intelligence will spark a wave of spending across different sectors, which will ultimately be a tailwind for S&P 500 earnings per share.

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Subramanian raised her 2024 S&P 500 earnings estimate to $250 per share from $235, representing a record high on Wall Street and well above the average consensus estimate of $235. If Subramanian's estimate proves accurate, it would represent a 12% year-over-year jump in corporate profits.

For 2025, Subramanian issued an S&P 500 earnings per share estimate of $275, which would represent year-over-year growth of 10% from her 2024 forecast.