Bank of America has warned that the Nasdaq 100 and tech sector Bubble Risk Indicator has climbed to a range of 0.72 to 0.8, suggesting conditions similar to roughly six months before the March 2000 dot-com peak. However, only 18 S&P 500 stocks are above the 0.8 threshold, representing just 3.2% of the index, compared to 50 to 100 stocks at the dot-com peak. US hyperscaler AI-related capital expenditures are projected at approximately $795 billion in 2026 and $1.08 trillion in 2027. In this context, the bank’s strategists recommend call spread strategies rather than concentrated bets on megacaps, allowing investors to capture the rally while limiting potential losses if the bubble bursts.
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