High valuations are not a problem! Bank of America: Strong corporate fundamentals are expected to support U.S. stocks

Despite the S&P 500 index valuation being at its highest level in decades, Bank of America believes that strong corporate fundamentals may support stock market performance. Savita Subramanian pointed out that corporate earnings expectations have turned positive, and the recovery in capital expenditures will drive corporate profits. Despite facing high interest rates and inflation, the S&P 500 index profit margins have outperformed expectations, mainly due to companies moving away from low-quality growth models. She warned that some large companies are becoming more asset-intensive, which may impact profit margins, but investments in artificial intelligence could lead to productivity improvements