BCA said in its latest macro report that IT investment in software, hardware and data centers contributed 0.8 percentage point to U.S. real GDP growth in the first quarter of 2026, the highest reading this century. Based on a comparison with the technology investment cycle of the 1990s, the firm said the current AI capital expenditure cycle could still last another three to five years. BCA argued that improving revenue and profit margins at data centers have given hyperscale cloud providers room to keep expanding. It also said that even if leading large-model commercialization runs into price competition, lower model usage costs may encourage wider enterprise adoption of AI, keeping demand strong for compute, servers, power and data centers. At the same time, BCA flagged equity supply as a key risk. The report described mega IPOs as an important market-top warning, saying that heavy large-cap issuance and rapidly rising fundraising volumes can drain liquidity and make valuation expansion more vulnerable to stalling. Its historical chart showed that, on average, the S&P 500 saw a peak-to-trough drawdown of about 24% within two years after major IPOs.
According to BlockBeats, BCA said in its latest macro report on Sept. 10 that IT investment across software, hardware and data centers contributed 0.8 percentage point to U.S. real GDP growth in the first quarter of 2026, the highest level this century.
AI spending cycle may have more room to run
Comparing the current phase with the technology investment cycle of the 1990s, BCA said the present AI capital spending wave could continue for another three to five years. The firm said stronger data center revenue and better profit margins have created a base for hyperscale cloud companies to keep expanding.
The report added that even if commercialization of frontier large models faces price wars, falling model usage costs could still push more companies to adopt AI. That, in turn, may continue to support demand for compute capacity, servers, power and data centers.
Mega IPOs flagged as a late-cycle market signal
BCA also said the variable that deserves closer attention may come from equity supply. The report described "mega IPOs" as an important warning sign for a market at elevated levels: when large listings come in clusters and fundraising volumes rise quickly, market liquidity can be diverted and valuation expansion can lose momentum more easily.
Its historical chart showed that within two years after major IPOs, the S&P 500 had, on average, seen a peak-to-trough drawdown of about 24%.
BCA's view is that AI capital expenditure will still support earnings and growth, but mega IPOs, financing conditions and higher yields will determine when this rally shifts from being earnings-driven to facing a liquidity test.
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