Wall Street says it’s time to reset the AI ​​narrative

Two of Wall Street’s biggest firms say the AI ​​boom is far from a speculative frenzy.

Instead, BlackRock and Bank of America say the cycle is being driven by real corporate investment, earnings and productivity gains — not the kind of irrational exuberance that defined the dot-com bubble of the early 2000s.

“We don’t think bubble framing is useful for investors at this stage,” Jean Boivin, head of the BlackRock Investment Institute, told a media roundtable on Tuesday.

“We want to avoid putting everything into a backward-looking metric or rating,” he continued, noting that it’s “incomplete” to describe the AI ​​boom as a bubble as the build-out continues to unfold at an “unprecedented” scale and pace.

Boivin also pointed to a healthy level of skepticism in the market today.

“There’s a lot of talk about the potential of a bubble … people are aware of the risks,” he said. “It is when there is no discussion that we should be more concerned.”

BlackRock argues that the spending boom in AI is so big that it has become a macro story in itself, the scale of corporate investment could push US GDP growth above the steady 2% trend that has dominated for decades.

“The capital spending ambitions associated with AI buildout are so large that micro is macro,” the firm wrote in its outlook, estimating corporate spending plans between $5 trillion and $8 trillion globally by 2030, most of it in the US.

“The challenge for investors: Reconciling large capital spending plans with potential AI revenue,” BlackRock added. “Do their orders of magnitude match?”

The firm also flagged the physical limits of the build-out, from compute to grid, noting that AI data centers could consume 15% to 20% of US electricity by the end of the decade. This makes the build-out transformative and debilitating: “This frontloading of costs is necessary to realize the ultimate benefits,” Blackrock wrote.

BlackRock said those pressures are part of a structural shift, arguing that AI is helping stocks to record highs and that it “remains pro-risk and sees the AI ​​theme as still a key driver of US equities.”

Bank of America struck a similar tone, but with more stark warnings about how the next phase of the boom might play out.

“Is it 2000? Are we in a bubble? No,” Savita Subramanian, head of U.S. equities and quantitative strategists, said on BofA’s outlook call on Tuesday. “Will AI Continue Uninterrupted in Leadership? Also Not.”

Subrahmanyam sees the current environment as a pause rather than the start of a downturn, describing a potential “air pocket” where capital spending outpaces revenue growth. That lag between investment and monetization, especially around power and infrastructure constraints, could scare off investors in the near term.