How the ‘AI put’ has become the only thing that matters for stocks

Bank of America strategists argue that the dominant force in U.S. equities is no longer the bond market but what they term the "AI put" — the assumption that artificial intelligence investment will keep supporting earnings and valuations. While investors have focused on rising global bond yields as the likely trigger for a selloff, BofA suggests the greater risk lies in anything that undermines the AI narrative itself.

The concept echoes the earlier "Fed put," when investors trusted central banks to cushion markets. Today, that reassurance increasingly comes from expectations that AI-related spending and productivity gains will underpin corporate profits. That makes equity prices sensitive not just to interest rates, but to AI news flow — capital expenditure plans, chip demand, and adoption timelines.

For observers, the key question is what happens if that faith weakens. A disappointment in AI earnings or a shift in spending could matter more than a move in yields. Watching AI-linked guidance and bond yields together offers a clearer picture of market risk than either alone.