Evercore ISI: AI selloff is a buying opportunity
SPY•Evercore ISI says the AI-driven selloff is a buying opportunity, with its risk barometer at four of 10 indicators flashing red. US indexes were modestly higher, led by the Nasdaq, up about 1.3%.
1. Evercore sees buying opportunity
Evercore ISI says the AI-driven selloff is a chance to buy, arguing that the structural bull market remains intact despite high yields. Its updated AI FOMO Risk Barometer shows four of 10 indicators flashing red; a reading above seven signals an unattractive risk/reward, the firm says.
2. Risks and strengths
Evercore says high yields, index concentration, a Fed hiking cycle, sticky inflation and a stalling capital markets cycle are adding pressure. Hyperscalers’ 12-month forward free cash flow has fallen to negative $200 billion, while the NYSE advance/decline line is at its 200-day moving average and equity risk premiums are near zero. The firm also points to healthy leverage, strong AI demand, growing backlogs, low vendor financing risk, solid jobs, contained credit and rising earnings estimates.
3. Market moves
US indexes were modestly higher, with the Nasdaq up about 1.3%; technology led S&P 500 sector gainers, while consumer staples were weakest. The Euro STOXX 600 rose about 0.8%, the dollar and gold gained, bitcoin was roughly flat, US crude fell more than 2%, and the 10-year Treasury yield edged down to about 4.98%. Evercore says it remains long its “AI Class of 2026” stocks unless credit spreads widen or earnings revisions turn.
