BofA's Hartnett: AI capex collides with bond stress, tech relief may wait until 2027

According to Wall Street CN, BofA Merrill Lynch's Global Investment Strategy team released its weekly Flow Show report on October 29, 2025, in which strategist Michael Hartnett argued that the surge in AI-driven hyperscaler spending is colliding with structural pressures in the bond market, weighing on the tech stock bull market. The report states that debt issuance by AI hyperscalers reached $182B in 2026, up sharply from $17B in 2024, and that the resulting bond supply shock is suppressing tech credit performance, with total returns on US investment-grade tech bonds relative to the broader investment-grade index falling to a 30-year low. Over the same period, global central banks have raised rates 42 times cumulatively in six months, the US dollar has strengthened, Treasury yields have risen, and the tech sector's leadership has clearly stalled, with the Nasdaq 100 touching a 30000 ceiling and the Philadelphia Semiconductor Index down 20% from its peak. The report adds that policymakers will not allow bond yields to rise disorderly in a way that threatens stock market wealth or bank collateral, and that the threat of yield curve control (YCC) or quantitative easing (QE) would effectively cap yields. However, a genuine relief for risk assets and AI stocks depends on lower bond yields and easier financial conditions, and that relief valve is most likely to arrive in the first half of 2027.