Bank of America believes that gold and Chinese stocks are the best hedges against AI stocks that have soared this year, leading to generous valuations.
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“AI equity leadership ain’t budging for time being and we like gold & China stocks as best boom/bubble hedges,” said BofA analysts led by Michael Hartnett.
BofA Flags Inflation Risk Amid China Stock Boom
Analysts at the bank added that the market expects upbeat economic growth next year paired with falling interest rates and accommodative economic policies from the Trump administration. That could potentially lead to a revival in inflation, strengthening the case for gold.
Meanwhile, Chinese stocks have soared this year, with the iShares MSCI China ETF (MCHI) up by 37% year-to-date. BofA expects China’s AI contributions and momentum to continue in 2026.
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