Bill Gross Says the Quiet Part Loud: AI Stocks Could Rise Even If the Economy Doesn't
Bill Gross just dropped a new playbook for investorsone that splits the field between bullish tech momentum and a bond market that might not cooperate. The 10-year Treasury yield, he says, is unlikely to dip much below 4.25% anytime soon. Why? A mix of sticky inflation, growing deficits, and a weakening dollar. Gross points to a long-standing historical pattern: yields typically sit around 1.75 percentage points above CPI. With inflation showing few signs of backing down, bond bulls may be in for a long wait.
Warning! GuruFocus has detected 6 Warning Sign with MSFT.
But there's a different story unfolding in equities. Gross isn't calling for fireworks, but he's leaning constructive: a little bull market in stocks, powered largely by AI tailwinds, against a little bear market in bonds. He expects economic growth to hover around 12%, yet believes that's enough to keep tech-driven stocks grinding higher. Just months ago, he warned dip-buyers to stay away during the tariff-induced April selloff, when Trump's trade rhetoric spooked markets. That caution has now shifted to a more neutral stancewith Gross acknowledging nothing dramatic either way for now.
Since that early-April tumble, sentiment has flipped. The S&P 500 (SPY) is up more than 3% year-to-date, inching closer to its all-time high. The Nasdaq 100 has climbed over 5% and was on the verge of closing at a record. Tesla (NASDAQ:TSLA) and other AI-linked names have led the rebound, fueled initially by retail buyers and now drawing the attention of bigger institutional players. If Gross is right, this tug-of-war between rising bond yields and resilient tech could define the back half of 2025.
This article first appeared on GuruFocus.
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