BofA's Raedler: AI winners may still lose as capex hits $1 trillion

Bank of America's note places the current AI spending wave alongside two earlier buildouts that transformed the economy yet left many financiers poorer: 1870s railroads and 1990s fiber networks. In both cases, strong profits drew a wave of investment until capacity exceeded demand, prices fell, and returns on capital sank. Raedler sees the same mechanics in AI, where hyperscaler capex expectations have climbed to $1 trillion from $330 billion in early 2025.

The report points to a specific squeeze: average token prices have fallen around 50% since the summer, so revenue can stall even as usage booms. Business AI spending data from Ramp cited in the note show spending has faded slightly since August while token volumes keep rising. Raedler called this monetization disappointment in the face of intense competition the precise failure mode seen in past capital cycles.

The market reaction was visible. The Nasdaq 100 fell 2.5%, and the Philadelphia semiconductor index posted its eighth straight loss, its longest run since 2008. Among individual names, NVIDIA slid 1.43% to $214.13 and Microsoft fell 1.93% to $529.05. Raedler's warning targets investor returns and stops short of a crash forecast, leaving the tension between falling token prices and rising capex budgets as the central issue for AI stock holders.