Author: Zhang Yifan
Editor: Shen Siqi
Source: Hard AI
AI continues to be hot. Following the recent impressive performance of ASML and TSMC, Bank of America has brought new heavyweight news: Cloud capital expenditure for 24H2 will reach a historic high.
Bank of America stated that due to the significant increase in cloud capital expenditure by cloud service providers (CSP) such as Meta, Google, Microsoft, etc., the market has raised expectations for cloud capital expenditure in 2024:
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It is expected that in the second half of 2024, global CSP capital expenditure will reach $121 billion, a 14% increase compared to the previous period, setting a new record;
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It is expected that in the full year of 2024, global CSP capital expenditure will reach $227 billion, a 39% increase year-on-year, setting a new record.
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Analysts at Bank of America believe that this wave of growth in cloud capital expenditure is far from over. They point out that the market has just entered the second year of AI infrastructure construction and is only in the first year of the typical three-year cycle of rising capital expenditure in the tech industry. Therefore, cloud capital expenditure is expected to further increase in the future.
Microsoft, Amazon, Meta, and Oracle's cloud spending plans for 2024 and 2025 confirm Bank of America's view. Currently, Microsoft, Meta, and Oracle have all stated that they will increase capital expenditure in 2025. Oracle even announced that its capital expenditure in 2025 will be double that of 2024.
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Microsoft: Capital expenditure for the fiscal year 2025 is expected to be higher than 2024;
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Meta: Will continue to increase investment in 2025;
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Oracle: Capital expenditure for the fiscal year 2025 (ending in May 2025) is expected to be double that of 2024;
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Amazon: Will significantly increase spending in 2024, but has not made any statements about 2025 yet;
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Google: Is more cautious, stating that it is too early to discuss 2025.
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According to market consensus expectations, global cloud capital expenditure will reach $251 billion in 2025, an 11% year-on-year increase. However, Bank of America believes that considering the ongoing AI spending and cloud deployment, this forecast may be conservative. Bank of America added that based on past investment cycles in the tech industry, capital expenditure growth is expected to gradually slow down after the commercialization of artificial intelligence.
So, which companies will benefit from this wave of crazy investment? Bank of America specifically mentioned these areas: AI chips, AI networks, HBM memory, and server CPUs.
1) AI Accelerators (AI chips): Bank of America predicts that by 2027, the Accelerator TAM will increase from around $100 billion in 2024 to around $200 billion
This provides an opportunity for major suppliers NVDA/AVGO/AMD/MRVL, with NVDA being the preferred choice, expected to account for approximately 75% of the market share by 2027 (the chart shows NVDA's share in 2027 as 80%);
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2) AI Network: Bank of America predicts that by 2027, the market size of network equipment (interconnect/switching) is expected to reach $40 billion to $50 billion, accounting for 20% to 25% of the entire AI accelerator market. In this market, AVGO, NVDA, and MRVL have performed well, with AVGO as the leader in Ethernet switch chipsets. It is estimated that by the 2026 fiscal year, its AI-related sales may increase from $11-12 billion in the 2024 fiscal year to around $20 billion;
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3) HBM Memory: Bank of America predicts that by 2025, this market could reach $20 billion, with Micron Technology expected to capture 20-25% of the market share. This means that Micron's HBM sales could reach $4-5 billion, a 3-4 times increase from this year;
4) Server CPU: ARM has shown strong growth momentum in this field. With more companies adopting ARM's new architecture, its market share in the server CPU market is expected to continue to rise

Microsoft and Meta continue to increase investment in AI, with cloud spending reaching a historic high | AI Dehydration