Bank of America has told clients that bond yields would have to climb substantially higher than they are today before threatening the artificial intelligence trade, according to MarketWatch. The bank's analysts note that AI-sector profits have been rising fast enough to stay ahead of stock-price gains, a dynamic that has compressed rather than inflated valuation multiples and reduces the sector's vulnerability to rising rates. Bank of America also pointed to its proprietary bubble risk indicator as a reason for confidence, saying readings from that measure leave it sanguine about U.S. equities and that any near-term sell-off would prove short-lived. The reassurance comes as climbing global bond yields have prompted investor concern about stretched valuations in the AI trade, since higher yields typically weigh on growth stocks by increasing the discount rate applied to future earnings.
Bank of America CorpBank of America reassures clients that AI-sector profits outpace price gains and its bubble-risk indicator is benign, an analyst call on the AI trade rather than a company-specific financial event.
