AI stock mania creating a 50-Year mispricing, BCA Research says

Investing.com -- The artificial intelligence boom has driven U.S. tech stocks to an unprecedented share of global market capitalization, creating what BCA Research calls a "50-year mispricing" that favours European equities in the long run.

For the first time in over five decades, the combined valuation of U.S. tech firms exceeds that of the entire European stock market, according to BCA’s note. It argues that investors are mistakenly assuming AI's productivity gains will translate into sustained profits for the dominant U.S. tech giants, much like the Web 2.0 era.

“This seems highly implausible,” analysts wrote, noting that the network effects that helped entrench the previous generation of tech monopolies may not apply to AI. History suggests that the winners of one technological revolution are rarely the leaders of the next, the report added.

The firm advises investors to “overweight Europe versus the U.S.” on a multi-year horizon but suggests waiting for a technical signal, specifically, a collapse in stock-versus-bond price trend complexity to 1.3, before making the move.

Additionally it also said to short coffee as a tactical trade.

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