[Bank of America Warns: Current Market Highly Concentrated in AI Sector, Strikingly Similar to the Peak of the 2000 Internet Bubble] BlockBeats News, October 4 — Bank of America Securities Chief Investment Strategist Michael Hartnett stated in the latest issue of *Flow Show* that the current structure of the U.S. stock market is highly similar to the period leading up to the peak of the dot-com bubble in 2000. In the six months before the March 2000 peak, the tech sector surged over 40%, while the consumer staples sector fell 30%, and all other sectors outside of technology and telecommunications declined. The current market exhibits a similar divergence, with AI and large-cap tech stocks rising alone while other stocks face pressure. Investors are going long on AI assets represented by the Nasdaq 100 Index and the "Mag7," while shorting equal-weighted indices like the S&P 500, which have lower correlations to AI. Hartnett noted that "the 1999 analogy still holds." Hartnett referred to AI as "the biggest bubble since railroads" and drew comparisons to the two railroad investment bubbles of the 19th century. The capital expenditures of hyperscale cloud computing companies are expected to reach 3.5% to 4% of U.S. GDP by 2027, still below the approximately 5% level seen at the peak of railroad construction. Meanwhile, current semiconductor prices are still rising, differing from the railroad era, where freight rates continued to decline due to overcapacity. However, he pointed out that the railroad bubble was supported by falling government bond yields, whereas the current high-interest-rate environment lacks this condition. In the bond market, the yield on the U.S. 10-year Treasury has risen to 5.33%, the highest level since 2002. Hartnett proposed a "buy the shame" strategy, advising investors to start increasing their holdings of bonds that have been neglected by the market. Historically, similar periods of extremely low returns have often corresponded to generational allocation opportunities, but a 100 to 200 basis point decline in yields may still require a credit event or an economic recession as a catalyst. Hartnett outlined four risk warning thresholds: the global financial sector ETF (IXG) falling below $125, the MOVE Index rising above 125, the mid-cap ETF (MDY) falling below $666, and the small-cap ETF (IJR) falling below $135. He believes that if small-cap stocks weaken alongside bank stocks, the market could experience a chain reaction of deleveraging. The Bank of America Bull & Bear Indicator fell from 9.3 to 8.8 this week but remains in the "sell" zone.