On September 8, Willem Sels, Global Chief Investment Officer of HSBC, stated that the valuation of US stocks does not fully reflect the potential for AI-driven productivity improvements and earnings growth. He pointed out that although the gap in price-to-earnings ratios between US and European stocks has narrowed, US stock valuations have not yet fully incorporated the impact of the AI structural investment cycle. Sels specifically mentioned that chip manufacturers are currently undervalued by investors, with skepticism even surrounding earnings growth forecasts for 2027. However, he expects this skepticism to gradually dissipate as companies provide more evidence of orders and guidance. Sels maintains an optimistic view of the stock market overall, believing that it has repeatedly overcome headwinds and volatility, thanks to the Exceed expectations (unexpectedly strong) resilience of the economy and corporations, as well as proactive responses from governments and businesses to shocks. He emphasized that companies adopting AI technologies have seen more significant growth in earnings, revenues, and profits compared to those that have not, particularly in the US, indicating that AI technology has tangibly boosted productivity. The biggest risk facing the stock market is a sharp rise in bond yields, with Sels suggesting that a 10-year US Treasury yield reaching around 5% could serve as a trigger for market volatility. While acknowledging that the market has long benefited from low bond volatility, he remains confident that robust earnings growth will continue to drive the stock market higher.