S&P 500 could see muted returns in coming months amid AI spending concerns
SPY•BCA Research forecasts below-average S&P 500 returns over the next one to three months, citing slowing growth, high profit expectations and concerns about AI spending. Its model projects largely flat returns and expects volatility to increase.
1. Cautious market outlook
BCA Research recommends a slight underweight stance on global stocks and forecasts below-average S&P 500 returns over the next one to three months. Its MacroQuant model projects largely flat equity returns and expects market volatility to increase, citing slowing economic growth and lofty profit expectations.
2. AI spending concerns
BCA said the AI investment cycle may be entering its later stages, though it is not forecasting an imminent collapse in AI-related spending. The firm said demand for AI infrastructure remains robust and GPUs are still in short supply, but warned that tech earnings could sputter unless sales grow rapidly. Its model favors utilities, healthcare and consumer staples over more cyclical sectors.
