The era of “easy money” in AI betting is coming to an end — BofA

Investors will likely find it increasingly difficult to make "easy money" by betting on stocks of companies benefiting from the AI boom rather than on stocks of companies dependent on consumer spending, according to Bank of America strategists, as reported by Bloomberg.

Massive spending on artificial intelligence and a decline in consumer spending on discretionary purchases and services—including due to job losses among white-collar workers — have already been factored into investors’ positions, BofA analysts led by Savita Subramanian wrote on Monday. “We believe it is time to selectively adjust positions, as it is dangerous to underestimate the appetite of U.S. consumers, and the sustainability of capital expenditures [on AI] may already be largely priced in,” Subramanian said.

According to her, actively managed funds currently hold a near-record low amount of stocks in companies from sectors that could be harmed by the development of AI. BofA includes IT services, consumer lending, and software developers among these sectors. At the same time, the share of industrial companies in fund portfolios, relative to companies dependent on consumer discretionary spending, is at a near-record high. Fund managers are betting most heavily on manufacturers of electronic equipment, devices, and components: the share of these securities in their portfolios significantly exceeds their weight in market indices, according to BofA data.

According to Subramanian, due to the threat of layoffs among high-wage office workers in industries at risk from AI, “white-collar workers” will continue to cut back on spending and opt for essential goods rather than discretionary purchases. Investors are already factoring in this shift: they are showing a greater preference for stocks of companies that produce essential goods than for stocks of companies that depend on spending on non-essential purchases.

Over the past year, consumer sector stocks have generally underperformed the S&P 500, according to Bloomberg. Meanwhile, shares of companies producing essential goods rose 4.6%, while those of companies reliant on non-essential purchases fell 3.3%. For example, shares of Lululemon Athletica and Nike have each lost about 50% during this period.

Subramanian considers investors’ current positions to be “justified”: the shift from consumption to capital expenditures was one of BofA’s key investment themes for this year. As early as November 2025, in their 2026 forecast, the bank’s strategists favored companies benefiting from capital expenditures over those dependent on consumer spending, and expected that spending on AI would remain a pillar of support for the market, Bloomberg notes.

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