Bank of America Strategist Raises Alarm Over Potential Ai-Driven Market Bubble: 'It Better Be Different This Time'

Benzinga_recent_news08-18

Bank of America strategist Michael Hartnett has raised concerns about the S&P 500’s record-high price-to-book ratio, indicating the possibility of an artificial intelligence-driven stock market bubble...

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America strategist Michael Hartnett has raised concerns about the S&P 500’s record-high price-to-book ratio, indicating the possibility of an artificial intelligence-driven stock market bubble...</p>\n\n<a href=\"https://www.benzinga.com/markets/guidance/25/08/47175066/bank-of-america-strategist-raises-alarm-over-potential-ai-driven-market-bubble-it-better-be-different-this-time\">Source 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ACC"},"translate_title":"美国银行策略师对人工智能驱动的潜在市场泡沫发出警告：“这次最好有所不同”","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AGG":1,"ESmain":0.6,"VOO":0.75,"MESmain":0.6,".SPX":0.6,"UPRO":0.6,"BAC":1,"OEX":0.6,"SSO":0.6,"SPXU":0.6,"OEF":0.6,"SDS":0.6,"SPY":0.75,"SH":0.6,"IVV":0.6,"VEU":1},"content_text":"Bank of America strategist Michael Hartnett has raised concerns about the S&P 500’s record-high price-to-book ratio, indicating the possibility of an artificial intelligence-driven stock market bubble.\nWhat Happened: Hartnett has revealed a chart that underscores investor optimism regarding the influence of AI. The chart illustrates the S&P 500’s price-to-book ratio, a metric that compares the total market cap of the index’s constituents to their total assets minus liabilities, hitting a record high of 5.3. \nThis exceeds the 5.1 level observed in March 2000, during the height of the dot-com bubble.\nAs reported by Insider, Hartnett noted that other traditional valuation measures also indicate market froth in comparison to historical data. For example, the S&P 500’s 12-month forward price-to-earnings ratio is at its peak since the dot-com era, with the exception of August 2020.\nDespite the high valuations reflecting elevated expectations for future earnings, Hartnett suggests that this does not necessarily imply a bubble situation. Numerous AI companies have consistently surpassed earnings expectations, which could validate the current optimism.\nAlso Read: Investors Flee Companies Seen as Most at Risk From Artificial Intelligence\nFurthermore, Hartnett mentioned that if the market begins to unwind, he anticipates bonds and non-US stocks to benefit. “It better be different this time,” he said. \nHe provided examples of funds that offer exposure to these trades, such as the iShares Core U.S. Aggregate Bond ETF (AGG) and the Vanguard FTSE All-World ex-US ETF (VEU).\nWhy It Matters: The warning from Hartnett comes at a time when AI is increasingly influencing the stock market. The high valuations and investor optimism could be a sign of an impending bubble, similar to the dot-com era. \nHowever, the consistent performance of AI firms exceeding earnings expectations may justify the current market scenario. \nAs the market dynamics continue to evolve, it remains to be seen how these factors will impact the future of the stock market.\nRead Next\nTech Expert: AI Boom Could Have Greater Financial Impact Than Dot-Com Crash\nImage: Shutterstock/Nicoleta Ionescu\nThis content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.11","shortVersion":"4.35.11","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2560920344","isCrawlerRequest":true}