"Don't go against AI!" HSBC: Bond market turmoil can't stop stocks from surging, AI remains constructive as the main theme

According to Jinse Finance, despite a new wave of bond market sell-offs and increased volatility in global risk assets, the stock market has shown rare resilience. The S&P 500 index continues to steadily advance toward new historical highs, indicating that the preference for equities—especially the AI theme—remains unwavering. The HSBC Global Investment Research team’s latest view is clear: investors should not “trade against AI.” The bank believes that the AI sector’s profit momentum is strong, monetization paths are becoming clearer, and, after adjustments, valuations are no longer expensive. Overall, the risk-reward ratio remains attractive.

Profit Momentum and Monetization Signals Resonate

HSBC strategists pointed out that AI is still one of the most difficult trends in the market to fight against. Monetization signals continue to be positive: reports indicate that OpenAI's enterprise business sales have more than doubled since July, demonstrating that enterprise willingness to pay for generative AI is rising. Meanwhile, surging AI inference demand is boosting major hyperscale cloud providers’ cloud-related revenue, while GPU leasing prices remain strong. This means the AI industry chain is shifting from a “capital expenditure story” to an “income realization story,” alleviating market concerns on returns for computing power investment.

Although AI model pricing signals are mixed and industry competition may compress profit margins in certain segments, better-than-expected earnings, ongoing analyst upgrades, and prior significant valuation corrections in tech stocks together suggest much of the downside risk has already been priced in. After a round of “valuation slashing,” the technology value chain now looks relatively inexpensive, leaving room for further price increases.

Bond Market Turmoil Struggles to Undermine the AI Theme

Recent bond market sell-offs have pushed yields higher, which usually puts pressure on high-valuation growth stocks. However, stock market performance demonstrates that earnings support from the AI theme is offsetting the impact of rising rates. HSBC believes that as long as AI monetization continues to be validated, corporate IT spending tilts toward AI, and demand for cloud and computing power remains strong, AI-driven market rallies still have further potential.

In terms of market structure, AI trades have shifted from being purely concept-driven to being profit-driven. Investors' focus is no longer on “whether there’s a story,” but on “whether it can make money.” Although capital expenditure among cloud providers remains high, revenue realization and order visibility have improved; soaring demand for AI inference means computing power usage is shifting from training to inference, making the commercial cycle clearer; strong GPU leasing prices reflect tight supply for computing power. Together, these signals reinforce the fundamental support for the AI theme.

Broader Allocation and Coexisting Risks

From an allocation perspective, AI trades may spread from a few leaders to broader areas, including computing infrastructure, cloud computing, semiconductors, AI applications, and supporting sectors like power and energy. But risks should not be ignored: if bond market volatility intensifies and yields continue to surge, growth stock valuations could still face pressure; if AI capital expenditure returns fall short, regulations tighten, or competition worsens, sector volatility may also increase.

The signal from HSBC is clear: as bond market clouds and stock market highs coexist, AI remains one of the clearest themes in global equity markets. For investors, rather than betting against AI, it is better to seek targets with profit realization potential and reasonable valuations amid volatility.