Bank of America’s indicator puts U.S. technology shares at the top of its bubble-risk ranking. The bank’s strategists point to the narrow group of AI-linked companies driving much of the Nasdaq 100’s advance.
Bank of America strategists say U.S. technology stocks currently look more frothy than other assets on the bank’s internal bubble-risk measure. Bloomberg reported that the bank ranks 32 asset classes and sectors. Oil, healthcare and South Korean equities also appeared near the top of the list.
The analysts cited narrow market breadth as a concern: the Nasdaq 100 has continued to rise even as bond yields climb, but a small group of large companies tied to artificial intelligence is driving much of the advance. The strategists described gains concentrated in a handful of shares as a classic feature of a developing bubble. The indicator is a risk signal, not a prediction that a crash is inevitable.
The scale of investment in AI infrastructure shows how much is at stake. McKinsey estimates global spending on data centers could reach $7 trillion by 2030. Financial outlets have reported that four major U.S. technology companies — Amazon, Alphabet, Microsoft and Meta — plan about $725 billion in capital spending in 2026, much of it related to AI.
The Wall Street Journal had previously warned that such investment could prove risky if productivity gains fail to justify the cost. As an example of volatility in related markets, the RBC report cited a June drop of more than 12% in Samsung Electronics and SK Hynix shares amid concerns about a memory-chip bubble. Those episodes do not establish that the entire AI sector is in a bubble, but they show how quickly investor expectations can shift.
Bank of America also found high ‘frothiness’ readings outside technology. The risks identified by the strategists, as reported by Bloomberg, include the scale of investment and the narrowness of the market rally. Their assessment is the strategists’ view, not a guaranteed forecast for share prices.