AI Spending Puts Magnificent Seven’s Cash-Flow Advantage Under Pressure
Michael Hartnett said accelerating artificial-intelligence investment is pushing the group toward about $1.2 trillion in capital expenditures and greater bond-market exposure.
Bank of America Chief Investment Strategist Michael Hartnett said accelerating artificial-intelligence investment is putting pressure on the cash generation and restraint that helped make the Magnificent Seven attractive to investors.
In a Sept. 23 recorded interview, Hartnett said the group is shifting from cash-flow businesses toward about $1.2 trillion in capital expenditures. The Magnificent Seven refers to Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.
Investors viewed the companies partly as cash-rich alternatives to government debt. Their growing AI-related spending is changing that profile by increasing their exposure to bond-market financing and higher yields.
Global AI-related investment is estimated to exceed $1 trillion in 2026, including $581 billion in the United States. Cumulative global AI investment is estimated to reach $1.8 trillion by the end of the year.
The commonly cited estimate for U.S. hyperscaler capital expenditures is about $800 billion in 2026. The broader global estimate includes selected public companies outside the hyperscaler group, private companies and AI-exposed companies outside the United States, and may involve some double-counting.
The 10-year Treasury yield was 5.17% on Sept. 25, while the 30-year yield was 5.49%.
“Central Banks never run out of ammunition, but they can run out of credibility,” Hartnett said.
