AI Monetization May Begin Outpacing Spending, JPM Says

Dow Jones
Aug 11
 

1413 ET - Concerns about the returns on steadily rising artificial-intelligence spending should wane going forward, as earnings reports increasingly show AI monetization, JPMorgan analysts write in a note. Though most hyperscalers are expected to have negative free cash flow in 2027, "demand and order coverage are improving relative to capex, as evidenced by rising backlog-to-capex and book-to-bill ratios," the analysts write. "This suggests that monetization may start ramping faster than spending, which should support stronger future revenue growth and further alleviate concerns about ROIC." Backlogs are high and converting into recognized revenue growth, while demand also remains high and rising, the analysts add.

 

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