BofA Backs AI Infrastructure Plays, Sees IT Multiples Falling Below 15–16x
Updated
Updated · The Economic Times · Jun 8
BofA Backs AI Infrastructure Plays, Sees IT Multiples Falling Below 15–16x
1 articles · Updated · The Economic Times · Jun 8
Summary
BofA is steering investors toward AI infrastructure beneficiaries—data-center cables, wires, transformers, power gensets, and aluminum and copper—rather than software stocks.
The bank says a global AI capital-spending cycle is creating stronger growth visibility and a structural commodity upcycle, while IT lacks enough value, growth, or policy support to fit its preferred themes.
IT valuations have already compressed from the low-to-mid 20s to about 15–16 times earnings, but BofA says further derating is still possible.
Beyond the AI trade, BofA favors large private and PSU banks in value, while avoiding mid-sized private banks and NBFCs because of stress risks and possible margin pressure from higher rates.
The call comes as BofA turns more cautious on earnings: among NSE 200 companies, profit growth was 9%, yet 80% missed estimates, reinforcing its view that the bull case has faded.