Live Markets-Banks to benefit from the big AI buildout - BofA

Wall Street indexes dip; Dow leads losses, off 0.6% Comms svcs leads S&P 500 sector losses, energy leads gains STOXX 600 down ~0.6% Dollar dips, US crude up >2%, gold slips ~0.5%, bitcoin edges up US 10-year Treasury yields rise to ~4.76 % The financial sector .SPSY is among major S&P 500 sectors that BofA likes right now. Savita Subramanian, equity and quant strategist at BofA Securities, said last week in an interview with Reuters that she likes sectors that include companies "getting the money in this capex spend cycle," and that includes financials. > "I like companies that are lenders, especially the high-quality lenders that haven't been able to extend capital," she said. "Financials look really interesting because we've been in a very different environment." > "If we see rates rise or credit spreads widen, I think that large-cap financials could be in a much better position than they have been historically," she said. "Their balance sheets... are relatively healthy, and if we are in this capex AI buildout cycle, somebody has got to keep lending and my sense is that it shifts to the bigger banks." The scale of AI buildout creates opportunities for banks across lending and capital markets, according to analysts and strategists at BofA Securities. > "The impact of the AI capex cycle on revenue growth for the Wall Street banks is far ranging, starting from facilitating AI debt financing, to IPO activity, to fast emerging wealth management opportunities," they write in a note led by Ebrahim Poonawala. Comments from Nvidia's CEO last week following the company's quarterly results reinforced the view that AI buildout is going to continue to be big, they say. Regional banks are likely to benefit as well, the BofA analysts say, with "the second and third derivative impacts that the data center buildout is having on local economies" boosting loan demand. They note that about a third of U.S. growth in the first half of 2026 was because of AI capital expenditures, while "most of the rest was due to consumer spending, which is also influenced by AI due to the impacts on job growth and wealth creation." To be sure, they say, political pushback against AI data centers could slow the pace of investment.

Live Markets-Banks to benefit from the big AI buildout - BofA

Market context from the live blog

Financials remain a favored sector at BofA

BofA says banks stand to benefit from AI buildout

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