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Bank of America estimates 2025 cloud capex growth could reach 69 percent amid AI market volatility
Thursday, February 5, 2026 at 02:59 AM
Bank of America analyst Vivek Arya suggests the current market selloff in AI chip stocks is an overreaction. He notes that 2025 cloud capital expenditure growth could reach 69 percent, significantly higher than initial estimates of 20 to 30 percent. The report argues that even if AI software business models are shifting, the underlying demand for AI semiconductor infrastructure remains strong due to enterprise and sovereign nation investment cycles.
Context
Bank of America analyst Vivek Arya recently addressed the paradoxical selloff hitting Nvidia and the broader semiconductor sector. The market has simultaneously sold off software stocks on fears that AI will replace them, while dumping chip stocks on concerns that AI returns are deteriorating. Arya argues these two narratives cannot coexist, suggesting the current volatility is an overreaction similar to the DeepSeek shock in January. This "correlation shock" appears driven by mechanical position unwinds rather than a fundamental shift in AI demand.
Crucially, the bank now estimates that 2025 cloud capital expenditure growth could reach 69%, significantly higher than the initial expectations of 20% to 30%. This data suggests that hyperscalers and sovereign nations are accelerating infrastructure builds despite the market's uncertainty. For Nvidia, this implies a sustained growth runway as enterprise adoption remains in its early stages and high-performance models require continuous, massive investment to remain competitive.
Current valuations likely already reflect fears of a spending slowdown that may not materialize in the near term. Even if productivity gains take years to fully prove their value, the infrastructure buildout cycle shows no signs of slowing down. Investors should view the recent price action as narrative-driven de-risking rather than a change in the core fundamentals of AI capex.
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