Bank of America: Market Pinning Hopes on AI Proliferation Recreating China's WTO Accession, Enabling Global Corporates to Achieve Margin Leap

BlockBeats News, May 30th—In its latest report, Bank of America Securities pointed out that the rare deviation between corporate earnings expectations driving global stock market to new highs and traditional macro fundamentals has emerged. The MSCI Global Index's 12-month forward EPS has increased by 9% in the past three months, translating to an annualized growth rate of nearly 40%. The S&P 500's three-month EPS momentum has surged to 12%, reaching a 40-year high. However, the global PMI has continued to decline to a two-year low of around 50.5. More importantly, around two-thirds of this round of earnings upgrades are from profit margin expansion expectations, with Europe and the global 12-month forward consensus profit margins reaching historical peaks of 13.9% and 11.4%, respectively.

Bank of America has likened this anomaly to China's accession to the WTO in 2001—when over 1 billion labor forces integrated into the global economy, weakening the bargaining power of workers in developed countries, driving the after-tax profit share of GDP from 5%-8% to 10%-12%. Now, the market is betting that the large-scale deployment of AI tools will similarly impact white-collar bargaining power, leading to a structural surge in corporate profit margins, even in the current context of macro stagnation.

Bank of America listed five major risks that are underestimated by the market in the report: macro downturn, internal demand contraction triggered by AI substitution, the cost of using large model tokens has doubled since the beginning of the year, productivity gains may take a decade to materialize rather than immediate realization, and mass white-collar unemployment could lead to political backlash and windfall tax pressure. The market is currently pricing in this almost ideal scenario of "unquestionable demand, record profit margins," too high. If the macro downturn and risk premium widening come true, the current profit-driven logic will face a double test of profit margin expectation downward revision and valuation compression.