JPM | APAC THEMATICS - Hyperscalers = Hypergrowth. 3x reasons to Buy... booming backlogs, positive jaws & attractive valuations.

Research evidence excerpt

JPM | APAC THEMATICS - Hyperscalers = Hypergrowth. 3x reasons to Buy... booming backlogs, positive jaws & attractive valuations.

Specialist Sales

APAC Specialist Sales J P M O R G A N

31 July 2026

have clear line-of-sight to strong financial returns… For servers and networking equipment, it takes a little less than 3 years to

breakeven on that investment... Servers currently have a useful life of at least 5-6 years and most of our AI capacity is contracted

for at least 5 year terms… For data centers, which have >30 year useful lives, we should get at least 5 to 6 generations of server

economics”.

On the FCF inflection “In the ST, when demand necessitates so many DCs being built simultaneously in advance of when we

can start monetizing, we'll spend a lot of capex and see FCF headwinds… But as we get a few years out & revenue growth

outpaces incremental capex growth... The resulting revenue, FCF and ROIC is very compelling… We've done this before in the

first era of cloud computing just over a longer time horizon... Returns in AI are tracking what we saw with core at the same point

of evolution, actually a little ahead.

On the scale of the growth opportunity “We have long believed AWS could become a few $100 bn revenue business, and now

believe it will be at least double that and very possibly be a $1tr annual revenue business for us in time, with very appealing

accompanying FCF and ROIC.

HYPERSCALER CATCH UP - 3x key charts to put on your radar

(1) Hyperscaler backlog boom… the trillion dollar club (well, $1.7tr actually). The market focuses most on hyperscaler capex…

but what’s been really interesting the past 2x quarters is how rapidly the order backlogs at the hyperscalers have grown. Backlogs