BofA strategists say AI spending, not bond yields, is the key risk for US equities

What happened

Investors have been focused on a spike in global bond yields as a possible trigger for a selloff in US equities. Strategists at BofA Global Research pushed back on that framing, saying the real threat to the stock market lies elsewhere.

Their argument centres on what has been described as the "AI put": the idea that continued enthusiasm and spending around artificial intelligence has become the single most important support for equity valuations, making it the variable that matters most for the market's direction.

Why it matters

When a market's performance is concentrated in one theme, the stocks tied to that theme carry an outsized share of index moves. Commentary that reframes what the dominant risk is can shift how investors position across equity indices, because it changes which headlines they treat as market-moving.

Equity risk sentiment also travels. Moves in US indices often feed through to the dollar and other major currencies, while gold and crypto can see flows as investors adjust how much risk they hold. Bond yields remain part of the backdrop, since they influence how future earnings are valued, even where strategists argue they are not the primary driver.

What to watch

Further research notes and commentary from BofA Global Research strategists on the AI theme, alongside the path of global bond yields that investors have been monitoring as a potential trigger for equity weakness.