Bank of America told clients in a note that macroeconomic forces would need to be substantial to derail the artificial intelligence‑driven technology stock rally, even with long‑term bond yields at multi‑year highs. The note was authored by equity‑linked analyst Benjamin Bowler.
Bowler highlighted that rising rates, persistent inflation, fiscal concerns and a leadership change at the Federal Reserve have left investors on edge ahead of a seasonally volatile period. He warned that these factors alone are unlikely to halt the tech‑focused advance.
Looking at history, Bowler noted that during the late 1990s U.S. 30‑year Treasury yields climbed about 200 basis points while the Federal Reserve raised rates by more than 100 basis points, yet the Nasdaq continued to rise. He added that Middle East tensions have so far failed to dampen enthusiasm for technology stocks.
Currently, technology earnings are outpacing share prices, causing a de‑rating of the core U.S. AI names, although the firm’s bubble‑risk indicator remains subdued for the broader Nasdaq. Bowler cautioned that while volatility markets appear cheap, investors should not forego hedging macro risk, expect equities to bounce hard from any pullback, and view rapid recoveries from dips cautiously as they can signal bubble formation.
