BofA's Michael Hartnett prefers Mag7 bonds over AI shares after selloff

What happened

Michael Hartnett, Bank of America's senior strategist, said on October 30 that selected Magnificent Seven bonds yielding 6% to 8% look attractive after a sharp selloff, and he prefers lending to these technology giants over owning their shares.

Confirmed

Global impact / market context

The choice shows how AI spending splits rewards between lenders and owners. Companies putting huge sums into infrastructure must pay bond interest first, which supports bondholders, while shareholders wait longer for returns and absorb more uncertainty about when the spending pays off.

Analyst inference

Amazon illustrates the strain: it kept a $220 billion capital spending forecast for 2026, which means money set aside for long-term assets, and reported $42.4 billion in negative free cash flow over twelve months, even as operating cash flow rose 29% to $168.3 billion.

Analyst inference

What to watch

1. Amazon maintained its $220 billion capital spending forecast for 2026 while reporting $42.4 billion in negative free cash flow over the trailing 12 months, a measure of cash left after investment outlays. Confirmed
2. Watch whether Hartnett's preference for selected Magnificent Seven bonds yielding 6% to 8% gains traction with investors after the selloff, since that shift would move money from shares toward debt. Proposed
3. Track whether rising financing costs and heavier cash demands push more AI-focused companies to borrow, adding bond supply and lifting interest payments that compete with shareholder returns. Analyst inference

Evidence

• invezz.com