Investing.com -- Bank of America sees recent market developments, including DeepSeek’s emergence and DOGE-related news, as creating potential buying opportunities in U.S. stocks.
In its latest US 1 list update, BofA added nine stocks across various sectors, reinforcing its expectation that earnings growth will broaden beyond technology in 2025.
"The US 1 list is intended to represent a collection of our best investment ideas," BofA wrote, with the goal of delivering "superior investment performance over the long term."
Recent additions include AllianceBernstein (NYSE:AB), Ametek (NYSE:AME), Booz Allen (NYSE:BAH) Hamilton, Chewy (NYSE:CHWY), Chevron (NYSE:CVX), Datadog (NASDAQ:DDOG), United Airlines, Walmart (NYSE:WMT), and XPO.
Several of these names, such as AME and XPO, are expected to benefit from improving manufacturing conditions, as indicated by a potential rebound in the ISM manufacturing index.
The bank’s head of U.S. equity strategy, sees evidence that a manufacturing recovery is underway.
"By Q4 2025, it’s expected that 95% of S&P 500 stocks will grow earnings, up from 67% in Q4 2024," BofA noted.
This aligns with its view that AI-driven benefits will extend beyond semiconductors to industries using automation for efficiency.
On the government contracting front, BAH was added to the list despite concerns over federal spending cuts.
The bank believes "BAH may be a beneficiary of DOGE’s efficiency push" as government agencies look to outsource work to AI-driven solutions.
Meanwhile, defense names Northrop Grumman (NYSE:NOC) and RTX, which sold off in early January, remain on the list, with BofA expecting "a 10% increase in defense spending in 2025."
Regarding DeepSeek, BofA acknowledged its significance but stated it is "not a big course correction." They continue to forecast "a doubling of compute TAM towards $500B+ (CY25-CY28/29)."