Bank of America analysts suggest that US Treasury bonds could serve as a hedge against an AI-driven market downturn. The firm notes a shift in market correlation where stocks and bond yields may now decline simultaneously during an AI growth shock.
The analysis follows a revenue report from OpenAI in October 2026, where annualized net revenue reached $50 billion, missing earlier projections of $70 billion. Following this news, the Nasdaq fell by more than 1%, while Nvidia, AMD, and Oracle shares dropped by 2.9%, 3.9%, and 5.5% respectively.
Historically, AI-related concerns had pushed bond yields higher throughout 2026. However, the recent market reaction indicates that investors are now pricing in a demand shock that could compress both equity prices and yields in tandem.
The connection between AI and credit markets remains significant as hyperscalers continue to fund infrastructure through debt. These companies issued $121 billion in corporate bonds in the year leading up to October 2026.
Bank of America forecasts that annual corporate bond issuance from hyperscalers for AI infrastructure will range between $140 billion and $300 billion over the next three years.
