TipRanks
9 min read
The bull market has continued its impressive run, but Bank of America is warning investors that the road ahead could become considerably more difficult. While corporate earnings remain strong and AI spending continues to support growth, the bank sees mounting risks that could make it harder for stocks to maintain their upward momentum. And with expectations already running high, even strong earnings results might not be enough to keep investors happy.
Heading into the third-quarter earnings season, Bank of America expects earnings per share to grow by 32%, with tech and power companies benefiting from continued AI investment and rising energy demand. However, the bank is less optimistic about the broader market, anticipating slower year-over-year earnings growth outside those sectors. More concerning is its outlook for 2027, when higher interest rates, commodity pressures, geopolitical tensions, and uncertainty surrounding AI spending could present additional challenges.
Bank of America strategist Savita Subramanian explains why investors shouldn’t take the market’s recent strength for granted: “Following big positive surprises in the last two quarters, healthy beats are the status quo and may not be enough to drive stocks higher. Investors will likely be listening for reassurance that growth can be sustained despite rates and commodity pressure. 2027 risks are skewed to the downside in our view. Ultimately, index EPS remains highly dependent on the durability of the AI capex cycle and successful monetization, but the interplay between geopolitics, rates and Tech may be underestimated – a higher cost of capital and geopolitical bottlenecks could gum up what has so far been a mostly smooth story.”
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Yet, Bank of America’s cautious market outlook doesn’t mean the bank is turning its back on stocks altogether. Its analysts still see attractive opportunities in individual companies, even as risks build across the broader market. With that in mind, we’ve used the TipRanks database to take a closer look at two tickers that have earned the bank’s backing. Let’s see what makes them worth considering.
Salesforce (CRM)
Salesforce has come a long way since its founding in 1999, surviving the dot-com crash and growing into one of the biggest names in customer relationship management (CRM). Today, the $192 billion technology giant is doing much more than helping companies manage customer relationships. Its expanding collection of cloud-based software and AI tools is designed to help businesses work smarter, make better decisions, and get more out of every customer interaction.
