Materials sector positioned to gain from AI spending, defense growth and housing demand, says BofA
Key takeaways
- Hartnett pointed to what the bank estimates as a $750 billion and growing AI capital expenditure cycle, combined with global military spending approaching $3 trillion and a U.S.
- Materials stocks fall into what Hartnett described as the “humiliation” category, alongside consumer-related shares, Chinese assets and U.K. equities, which he called “all unloved potential pairs with chip mania;
- More broadly, Bank of America sees commodities, emerging markets, technology shares and small- and mid-cap companies as potential outperformers during 2026.
Materials sector positioned to gain from AI spending, defense growth and housing demand, says Bof A Fiona Craig Sat, May 9, 2026 at 10:12 PM GMT+7 3 min read BAC ^GSPC CNY=X factory worker 3 ©Pixfor Free.org Bank of America believes the materials sector could emerge as one of the next major beneficiaries of several powerful global trends, despite currently representing only around 2% of the S&P 500’s total market value, close to its smallest weighting in three decades.
According to Bof A chief strategist Michael Hartnett, the sector is “set to join new bulls on the block,” supported by rising geopolitical competition for natural resources, rapidly expanding artificial intelligence investment, higher global defense spending, a persistent shortage of housing in the United States, and gradual strength in China’s renminbi.
Hartnett pointed to what the bank estimates as a $750 billion and growing AI capital expenditure cycle, combined with global military spending approaching $3 trillion and a U.S. housing deficit exceeding four million homes.