Reverse buy signals flashing! Investment bank Cantor Fitzgerald: AI panic triggers gold sell-off, fundamental factors will support the continuation of the bull market in US stocks.

Investment bank Cantor Fitzgerald's latest report points out that the current situation, where investors have withdrawn from the market due to concerns about the disruptive power of artificial intelligence (AI), has created an ideal setup for further upside in the US stock market. The organization notes that the surge in purchases of bearish options, rising panic indicators, and declining optimism are all typical contrarian buy signals. Meanwhile, strong fundamentals such as earnings beating expectations and stock buybacks remain solid. Analyst Eric Johnston states, "Given the strong fundamental backdrop, this provides a very good setup for the next stage of the uptrend." Cantor Fitzgerald compiled data dating back to 1955 and found that in 21 years when GDP growth exceeded 2.25% and the Federal Reserve did not raise interest rates, the S&P 500 index rose in all those years, with an average return of 19.6%. Johnston says that due to the surge in AI spending ("Big 7" capital spending jumping from $382 billion to $650 billion), reshoring of manufacturing, tax cuts contributing 90 basis points to GDP, and the Federal Reserve's loose policy, they believe the likelihood of this scenario occurring by 2026 is "extremely high." Cantor Fitzgerald is currently bullish on large-cap tech and software stocks, which have recently been hit by concerns about cash flow and the risks of AI disruption, but are now oversold. For example, the P/E ratio of the Nasdaq is at a 10-year low compared to earnings growth rate, and the relative strength index (RSI) of the "Big 7" compared to the S&P 500 is only 23.75, indicating cheap valuation. Strategists also point out that with wage and housing costs declining and the impact of tariffs fading leading to a slowdown in inflation, they still hold bonds as a prudent hedge. Moreover, broader positive factors include: S&P 500 earnings expectations rising to $320 per share; profit margin expansion in equal-weighted indices driven by AI; narrowing budget deficit (to 5.2% of GDP by 2025); weak job growth outside of the healthcare sector; and strong consumer sales performance. Additionally, after de-risking recently, Eric Johnston and his team still "remain bullish on Bitcoin," believing that loose monetary policy and favorable liquidity will provide support.