Bank of America stated that Wall Street is embracing a brand-new investment theme—the BIG portfolio, which consists of Bonds, International stocks, and Gold.

Strategist Michael Hartnett pointed out that adopting a long BIG barbell strategy can help navigate the market volatility brought by the "artificial intelligence (AI) bubble."

He provided the following detailed analysis:

Bonds: As nominal GDP growth peaks, bonds are once again becoming a tool to hedge against risk assets. U.S. Treasury yields are gradually declining—the 5-year Treasury yield is expected to approach 3%, while the 30-year Treasury yield will trend toward 4%. The cyclical end of the "ABB" theme (Anything But Bonds) is favorable for bond-sensitive small-cap stocks. Currently, the rolling return of small-cap stocks relative to large-cap stocks is -4%, nearing a century low.

International assets: These will benefit from three factors—a weaker U.S. dollar, the end of deflation in the European Union and Japan, and the conclusion of fiscal overexpansion in EU and Asian economies. Among these, Chinese tech stocks are the optimal choice for hedging against the U.S. AI bubble within the "barbell strategy."

Gold: It can hedge against the risks of government instability and U.S. dollar depreciation. Although the gold bull market has shifted from "quietly rising" to "high-profile strength," its price is still expected to climb further.