A top Bank of America market strategist says investors chasing the AI trade should focus less on who is spending the money and more on who is receiving it.
In a new episode of the 2026 Year Ahead Outlook, Savita Subramanian, the head of US Equity and Quantitative Research at Bank of America, says historical capital expenditure cycles show a consistent pattern that many investors overlook.
Subramanian says CapEx booms tend to reward suppliers and beneficiaries of investment flows rather than the firms shouldering the spending burden themselves.
“What we’ve found in CapEx cycles is you usually want to buy the companies that are getting the money, not the ones that are spending the money. We’re still bullish on the AI theme, but we’re less enthusiastic about the companies that are actually spending the money, borrowing to spend, etc.”
While Subramanian did not go into specifics, her colleague Andrew Obin recently said that the real AI investment moat lies in the suppliers and service providers teaming up with data centers. Obin mentioned Johnson Controls (JCI) and Trane Technologies (TT) as infrastructure partners embedding themselves into data center operations.
Subramanian also points to a second force shaping the current market backdrop, describing a productivity cycle that has been quietly building since the pandemic.
“I think there’s also another cross-current here, which we also haven’t seen in a while, which is a productivity cycle.”
Subramanian says rising labor costs after Covid-19 pushed companies to aggressively pursue automation and efficiency, even before artificial intelligence became central to corporate strategy.
“And that really kicked in after Covid with labor inflation. You don’t even need AI to see productivity. In the last few years, we’ve seen a lot of companies just exert automation, efficiency and other techniques for driving a productivity cycle. Now we have AI, which I think could be transformative for some sectors.”
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.