MacroResearchBoard warns US stocks face 2 risks: AI and rising yields

US equities face a major test in the next 6 to 12 months as AI optimism collides with rising bond yields, according to investment strategy firm MacroResearchBoard.

"Investors are pricing in a perfect scenario for AI monetization that may take years to materialize, while yields are climbing in a way that historically has punished elevated equity valuations," the firm said in a note dated July 3.

The S&P 500 slipped 0.05% to 7,354.02 on July 3, while the Nasdaq Composite fell 0.24% to 25,297.62, extending a weekly decline of 5%. Consumer cyclicals gained 1.52%, the only sector in positive territory, while industrials dropped 1.34% and energy stocks slid 0.57%. The 10-year Treasury yield edged down 0.02% to 4.38%, while gold rose 0.96% to $4,086.40 as investors rotated into haven assets.

The warning comes as the Nasdaq has surged roughly 20% in the second quarter of 2026, putting it on track for its largest quarterly gain since 2020, fueled by over $700 billion in AI-related capital spending from the largest technology companies. With inflation at 4.2% in May — the highest level in three years — the Federal Reserve has kept rates steady while leaving the door open to further increases, creating a potential headwind for the richly valued technology sector.

A Growing Chorus of Caution

Jamie Dimon, chief executive officer of JPMorgan Chase, warned in June that the bull market will eventually stop, saying he has been caught off guard by Wall Street's complacency toward geopolitical tensions with Iran, Russia and China. "I do think the probability of something bad happening is higher than I think it's probably embedded in the market," Dimon said at the Council on Foreign Relations CEO Speaker Series on June 16. Billionaire investor Jeremy Grantham, co-founder of GMO, also warned of a potential wipeout, saying US equities are the most expensive in history.

Semiconductor Selloff Deepens

Semiconductor stocks led the decline on July 3, with Sandisk plunging more than 10% and Micron Technology falling 7%, erasing some of the gains from earlier in the week after Micron's blowout earnings report. The selloff in memory and chipmakers weighed on the broader technology sector, with Broadcom and Seagate Technology also finishing lower as investors questioned valuations during a period of rising volatility. The tech-heavy Nasdaq finished the week down 5% as the artificial intelligence trade came under increasing pressure.

For investors, the diverging signals between strong corporate fundamentals and stretched valuations present a challenge. While concerns about high capital expenditures are valid, the long-term potential of AI remains intact. Diversification and a focus on individual company fundamentals rather than broad sector bets will be key in navigating the next 6 to 12 months.

This article is for informational purposes only and does not constitute investment advice.