UBS: Market underestimates AI investment cycle duration, capital expenditure return inflection point expected in 2027

TechFlow reported on Nov. 02 that, according to Bloomberg, Gerry Fowler, Chief European Equity Strategist and Head of Derivatives at UBS, said the AI investment boom remains solid, and the market has underestimated the duration of the AI cycle. The price-to-earnings ratios of some hyperscale cloud computing companies have already fallen below 20 times, while revenues continue to grow at an annual rate of 10% to 20%. Current valuations reflect relatively pessimistic market expectations.

Fowler believes that 2027 may become a key inflection point for AI investment. As data centers are delivered successively, backlog orders are expected to convert into revenue, allowing enterprise revenues to gradually catch up with capital expenditures. AI investment funds have not disappeared but are flowing toward memory chip and infrastructure suppliers. He pointed out that orders for some power equipment and cable suppliers have been booked through 2027 or even 2028, and semiconductor equipment companies such as ASML are benefiting from the production expansion of storage manufacturers such as Samsung Electronics and SK Hynix, with related profit expectations continuously revised upward.