[Bank of America: Market Hopes for AI Adoption Similar to China's WTO Entry, Global Corporate Profits Have 'Decoupled from Fundamentals'] BlockBeats News, May 30 — Bank of America Securities' latest report highlights that corporate profit expectations driving global stock market highs have shown an unusual divergence from traditional macroeconomic fundamentals. Over the past three months, the MSCI Global Index's 12-month forward EPS has risen by 9%, an annualized rate of nearly 40%. Meanwhile, the S&P 500's three-month EPS momentum surged to 12%, marking a 40-year high. However, global PMI has continued to decline, reaching a two-year low of approximately 50.5. More critically, about two-thirds of this round of profit upgrades stem from expanded margin expectations, with Europe's and the global 12-month forward consensus profit margins climbing to historic peaks of 13.9% and 11.4%, respectively. Bank of America likens this anomaly to China's WTO entry in 2001—when over 1 billion workers integrated into the global economy, weakening the bargaining power of workers in developed countries and driving post-tax corporate profits as a percentage of GDP from 5%-8% to 10%-12%. Today, the market is betting that the large-scale deployment of AI tools will similarly impact white-collar bargaining power, enabling structural profit margin increases, even in the absence of macroeconomic acceleration. Bank of America lists five major risks underestimated by the market in its report: macroeconomic downturn, AI substitution triggering endogenous demand contraction, the doubling of large model token usage costs since the beginning of the year, productivity gains potentially requiring a decade rather than immediate realization, and large-scale white-collar unemployment potentially sparking political backlash and windfall tax pressures. Currently, the market is overpricing an almost ideal scenario of 'stable demand, record profit margins.' If macroeconomic downturns and widening risk premiums materialize, the current profit-driven logic will face dual challenges of margin expectation downgrades and valuation compression. [Original Link]