You know that friend who shows up to the party and immediately points out that the music’s too loud and someone’s definitely going to break something? That’s Bank of America right now, and honestly, we’re here for it.
While every other major Wall Street firm is basically doing the financial equivalent of shotgunning Red Bulls and screaming “AI TO THE MOON!” for 2026, BofA just walked in with a sensible cardigan and some uncomfortable truths.
The Numbers Don’t Lie (But They Do Whisper)
Here’s the tea: BofA is predicting the S&P 500 will only climb about 4% in 2026. Meanwhile, their Wall Street buddies are out here throwing around numbers like they’re at a crypto convention in 2021:
- Deutsche Bank: 17% upside (sir, this is a Wendy’s)
- Morgan Stanley: 14% (still pretty spicy)
- Goldman Sachs: 11% (getting warmer)
- BofA: 4% (the designated driver of predictions)
It’s like showing up to a potluck where everyone brought dessert, and BofA brought a sensible salad. Necessary? Probably. Fun? Debatable.
The “AI Air Pocket” (Not as Fun as It Sounds)
BofA isn’t calling it a full-blown bubble – they’re not that dramatic. Instead, they’ve coined the term “AI air pocket,” which sounds like something you’d experience on a really bumpy flight to a tech conference.
Here’s what they’re seeing: Companies are spending money on AI infrastructure like they’re building the Death Star, but nobody’s quite figured out how to make it rain actual profits yet. It’s like buying a really expensive espresso machine and then realizing you still don’t know how to make coffee.
The good news? We’re not in full bubble territory. There’s no parade of questionable IPOs, and earnings are still somewhat backing up these sky-high valuations. The bad news? All this AI spending is creating what economists politely call “uncertainty” and what the rest of us call “expensive guessing.”
Why This Actually Matters
Look, predicting the stock market is basically professional fortune telling, but with better suits and more spreadsheets. The S&P 500 has been on an absolute tear – up over 20% in both 2023 and 2024. That’s the kind of performance that makes people forget that what goes up can, in fact, come down.
BofA is essentially saying, “Hey, maybe we should pump the brakes before we drive this thing off a cliff.” They’re pointing out that market liquidity is maxed out (translation: we’ve used up all our good vibes), companies are spending less on buybacks, and the Fed isn’t going to keep cutting rates like they’re handing out free samples at Costco.
The Bottom Line
Is BofA right? Who knows! They could be the smart money, or they could be the person who leaves the party at 9 PM and misses all the fun. But in a world where everyone’s betting on AI to solve everything from climate change to your dating life, having someone ask “but how exactly does this make money?” isn’t the worst thing.
Either way, it’s refreshing to see a major bank willing to be the contrarian voice in the room. Even if they’re wrong, at least someone’s asking the uncomfortable questions. And if they’re right? Well, they’ll have the last laugh – and probably a really good “I told you so” presentation ready to go.