Rohan Paul (@rohanpaul_ai) · 10/20/2026, 14:21:52
BoA: AI Capex Exceeds Forecasts by 50% as WACC Hits 10%
Bank of America research reveals that AI capital spending is running 50% above forecasts this year, while revenue exceeds expectations by only 20%, creating a significant mismatch. Hyperscalers' weighted average cost of capital has surged from 4% in 2023 to 10% due to rising risk-free rates and debt/equity costs. Despite higher financing hurdles, BoA projects continued capex growth for top hyperscalers through 2028 and estimates that demand for new data center capacity (2026-2030) implies $9.5T in investment, $2.1T above current forecasts.
SOURCE COVERAGEFull Original Report
Rohan Paul (@rohanpaul_ai) · 2026-10-20 06
Bank 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 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 2.1T above the current $7.4T capex forecast.
