HSBC: U.S. equities remain inexpensive, not fully reflecting AI potential

BlockBeats News, September 8 - HSBC Global Chief Investment Officer Willem Sels stated that U.S. stocks are not as expensive as they appear, with valuations still not fully reflecting the scale of AI-driven productivity and earnings boom. Sels noted that the price-to-earnings gap between U.S. equities and Europe has narrowed, but valuation multiples have yet to fully price in the structural AI investment cycle. Chipmakers in particular are being discounted by investors, even as 2027 earnings growth forecasts are questioned, with the belief that this skepticism will reverse as companies provide more concrete evidence through orders and guidance.

Sels is broadly bullish on equities, saying the market has repeatedly shaken off headwinds because the resilience of the economy and corporations has exceeded expectations, with governments and businesses taking proactive responses to shocks rather than waiting passively. Companies adopting AI show stronger earnings, revenue, and profit growth compared to non-adopters, especially in the U.S., proving that technology is already delivering tangible productivity gains. The biggest risk to equities is a sharp rise in bond yields, with the 10-year Treasury yield around 5% seen as a potential trigger point for volatility. The market has been "spoiled by low bond volatility for a long time," but the tailwind of strong earnings makes it difficult for stocks not to continue rising.