Don’t fight the AI trade as earnings season could extend the bull market: HSBC Sam Boughedda Tue, October 13, 2026 at 6:49 AM EDT 2 min read HSBC +1.44% ^GSPC -0.06% US500 US10YT=X Trade HSBC on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Investing.com -- HSBC told clients in a note on Tuesday that third-quarter earnings should provide the next upward catalyst for global equities, and that investors should not bet against the AI trade.
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"Don't fight the AI trade; earnings momentum, further signs of AI monetization, and cheap valuations keep us constructive," wrote Alastair Pinder, the bank's head of emerging market and global equity strategist.
Global equities have held up despite the bond market sell-off, with the S&P 500 grinding toward record highs. However, Pinder warned that "resilience shouldn't be mistaken for complacency."
The S&P 500's forward price-to-earnings ratio has fallen 16.5% since late 2025, and 27% of constituents have seen their multiples drop more than 20% this year. HSBC estimates every additional 50 basis point rise in the U.S. 10-year yield would compress the multiple by a further 4.3%.
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Pinder added that underlying volatility is also higher than the VIX suggests, with average three-month implied volatility for S&P 500 constituents at the 85th percentile of its historical range, against the 35th percentile for the VIX.
Since 2025, the index has gained an average of 4% during reporting windows against flat returns outside them. HSBC expects another beat-and-raise season, noting guidance is improving at its fastest pace since 2021 and that $64 billion of customs refunds should support margins.
Pinder said higher rates should have minimal impact on earnings, with about 80% of S&P 500 debt long-term and fixed-rate.
On AI, he pointed to accelerating inference demand and firm GPU rental prices. HSBC favors hyperscalers as the clearest near-term beneficiaries of compute demand.
Don't fight the AI trade as earnings season could extend the bull market: HSBC
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