Risk appetite is returning to the market, and Nvidia is rising. What concerns Bank of America?

U.S. stocks rose at the start of trading on November 11: investors, encouraged by positive quarterly results from cloud infrastructure provider CoreWeave, returned to buying. CoreWeave was able to reassure investors about demand for artificial intelligence infrastructure, giving market participants greater confidence that the AI rally is not over yet. Even Nvidia shares returned to an upward trend. However, BofA shared a more cautious outlook for U.S. stocks in 2027.

The S&P 500 broad-market index rose more than 1% in the first few minutes after U.S. markets opened. The Nasdaq 100 Index, which consists of the largest technology companies, gained 2%, while the Nasdaq Composite rose 1.7%. The Dow Jones Industrial Average, an index of blue-chip stocks, lagged slightly behind, rising 0.1%.

CoreWeave’s stock soared 15% and pulled other cloud-related companies and AI infrastructure players along with it. Nebius rose 12.5%, IREN 7%, Micron 6.5%, and SanDisk 9%.

Even Nvidia, whose stock came under pressure this week due to the scandal surrounding its CEO, Jensen Huang, rose by about 3%.

Savita Subramanian, head of U.S. equity strategy at Bank of America, believes that in 2027, the S&P 500—a broad U.S. market index—may not be the best investment option. Her opinion was published by Yahoo Finance.

“We’re not particularly optimistic about the [S&P 500] index. I think the index itself is somewhat risky: what concerns me is that we’ve seen money flowing into it for 30 to 40 years. And we’ve never been in a situation where funds were withdrawn from it,” Subramanian said. According to her, this causes her some concern, since both retail investors and asset owners are currently quite “saturated” with stocks, while the S&P 500 remains the most sought-after asset on the global stock market.

Subramanian warned that the situation with capital outflows could become complicated if investors need to raise capital—for example, to pay out promised returns. “And this is precisely where we see certain risks to the notion that the S&P 500 will always rise,” she added.

Since the beginning of the year, the S&P 500 has risen 10%, outperforming the Dow Jones Industrial Average, which gained about 9%, and the Nasdaq Composite, which rose 8%.

All things considered, this year has been a decent one for investors, even though it didn’t always seem that way, notes Yahoo Finance. The U.S. war against Iran triggered a severe price shock in the oil market: prices rose to nearly $120 per barrel. Inflation began to rise again, prompting the Federal Reserve to raise interest rates to 3.75–4% in September and likely to raise them even further at upcoming meetings. Traders are virtually certain that the Fed will raise rates by 50 basis points in December.

At the same time, the unprecedented boom in artificial intelligence throughout the first half of the year drove up the valuations of technology companies and the capital expenditures of hyperscalers—the largest providers of computing power—to their limits. But in the fall, the euphoria gave way to a downturn: risks of a slowdown in the construction of new data centers, the results of the midterm elections, which the Democrats won, and the rapid rise in the cost of debt financing triggered a significant contraction in valuation multiples and record sell-offs of shares in chipmakers and non-cloud service providers, Yahoo Finance noted.

This article was AI-translated and verified by a human editor