BCE Q2 Beat Puts a $1.3 Billion AI Spending Plan to the 2027 Test

BCE Inc. BCE is entering the heaviest phase of its AI infrastructure build after second-quarter results showed modest earnings and revenue growth. Most of the roughly C$1.3 billion in expected 2026 Saskatchewan AI data-center spending is scheduled for the second half.

The investment case now shifts toward execution. BCE must turn contracted capacity and construction progress into revenue while absorbing a temporary surge in capital intensity and lower free cash flow.

BCE Q2 Results Show the Near-Term Earnings Picture

Adjusted EPS increased 3.2% year over year to 65 cents and beat the Zacks Consensus Estimate by 2.2%. Revenues rose 1.5% to C$6.18 billion, supported by Ziply Fiber and Bell Media.

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BCE nevertheless maintained guidance for a 5%-11% decline in adjusted EPS in 2026. Free cash flow is projected at C$2.10-C$2.30 billion, down 28%-34%, as the Saskatchewan build raises spending.

BCE AI Fabric Requires Heavy Upfront Capital

Second-quarter capital expenditures rose 41.5% to C$1.08 billion, reflecting investment in Bell AI Fabric and Ziply Fiber. BCE expects 2026 capital intensity of about 20%, with most Saskatchewan spending still ahead in the second half.

The sector shows how capital-heavy AI infrastructure can be. Equinix, Inc. EQIX raised its 2026 non-recurring capital expenditure outlook to $4.71-$5.69 billion as demand, bookings and presales strengthened. Digital Realty Trust, Inc. DLR reported second-quarter bookings expected to generate $307 million of annualized GAAP rental revenue at 100% share, illustrating the revenue opportunity tied to contracted data-center capacity.

BCE Has 335 MW of Contracted AI Capacity

Bell AI Fabric had approximately 335 megawatts of contracted capacity by the second quarter, including the 300-megawatt Saskatchewan facility. BCE also has line of sight to about 800 megawatts of AI infrastructure capacity across Canada.

The contracted figure is already about 90% of the 373 megawatts assumed in BCE’s 2028 medium-term plan. That reduces some demand uncertainty, but construction timing still determines when contracted capacity begins contributing meaningfully to revenues.

BCE Saskatchewan Moves Toward 2027 Revenue

The first Saskatchewan phase remains scheduled to begin operations in the first half of 2027. BCE plans four data halls for two tenants and expects all four to reach their full revenue run rate by the end of 2027.

BCE received just below C$100 million of tenant prepayments in the second quarter, part of roughly C$400 million in setup fees and prepayments. The cash flowed through working capital and partially offsets the upfront cost of the project.

BCE Enterprise AI Broadens the Opportunity

Ateko and Bell Cyber generated combined revenue growth of 29% year over year, while underlying Bell Business Markets revenues increased about 3.4%. That gives BCE an enterprise AI growth channel alongside the data-center build.

The Winnipeg facility remains on track to enter service in the second half of 2026, while Merritt Phase 2 is expected in early 2027. Partnerships involving Cohere, BUZZ HPC, Hypertec and Celestica broaden BCE’s AI infrastructure and enterprise ecosystem.

BCE’s Scores Keep Execution in Focus

BCE’s AI strategy has a meaningful contracted base, but 2026 remains an investment year. The key test is whether construction milestones, tenant onboarding and enterprise demand convert the current spending surge into stronger 2027 revenue and cash generation.

The stock currently carries a Zacks Rank #4 (Sell), which argues for caution despite a Value Score of A. Its Growth Score of F, Momentum Score of D and VGM Score of C indicate that valuation is stronger than the stock’s growth and momentum profile, keeping execution risk central to the near-term outlook. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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