Bank of America says we are in a period of rising risk and rising return
The perfect storm of AI exuberance and radical policy change is brewing, and investors must brace for the consequences. Photograph: Timothy Clary/AFP/Getty Images
The bull market will continue in 2025, but investors should buckle up. So says Bank of America , which claims we are in a period of rising risk and rising return. With the Nasdaq 100 up 85 per cent and the magnificent seven stocks up 200 per cent since ChatGPT’s launch two years ago, the AI rally “has gone too far to neither boom nor bust”. BofA reckons the AI trade will become more bubbly before eventually bursting, saying 2024-25 is closer to 1996-97 than 1998-99. It expects “higher returns, higher volatility and larger drawdowns” in coming years.
AI aside, BofA suggests investors are underestimating the impact of “possibly the most radical US policy shift” in a century. Proposals for the largest deregulation since the 1980s, the highest tariffs since the 1930s, the most comprehensive plans for deportation of illegal immigrants in US history: huge policy shifts can drive “wide swings in asset prices”.
So can bubbles, and 2025 “could witness both simultaneously”. In short, the perfect storm of AI exuberance and radical policy change is brewing, and investors must be braced for the consequences.No quick fix for Intel’s woes as chief executive exitsCustomer fury as Dublin windows company shuts with thousands in depositsGolden Globes 2025: Good day for Colin Farrell and Andrew Scott.
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