UBS: Markets underestimate the duration of the AI investment cycle, with a potential inflection point in capex

UBS says markets are underestimating how long the AI investment cycle will last, with European equity strategist Gerry Fowler arguing the boom remains intact and that some hyperscalers now trade below 20x earnings despite 10-20% annual revenue growth, signaling overly pessimistic pricing. Fowler flagged 2027 as a potential inflection point, when data center deliveries should convert backlogs into revenue and bring earnings in line with capital spending. He noted AI money hasn't vanished but rotated into memory chips and infrastructure suppliers, with some power-equipment and cable vendors booked through 2027-2028 and ASML benefiting as Samsung and SK Hynix expand memory capacity, driving upward earnings revisions. Why it matters: the call challenges the bear case that AI capex is peaking and points to a second leg of the trade in the supply chain rather than the chip designers. Watch next: hyperscaler capex guidance, data center delivery schedules, and order-book updates from power, cabling and semiconductor-equipment names.