On August 14, according to market news, Bank of America’s Chief Investment Strategist Michael Hartnett and his team released a new research report defining the 2026 U.S. midterm elections as a core watershed for the current AI bull market in U.S. stocks. The report presents two scenarios: if the Republican Party retains the Senate and Texas Governor Greg Abbott is re-elected, the market will interpret this as a continuation of AI data center expansion and favorable AI capital expenditure policies, leading to sustained strength in the U.S. AI sector, with a potential bubble forming by 2027. Conversely, if the Democratic Party wins the Senate and the Texas governorship, the U.S. stock market could experience a significant correction of over 10%, which would simultaneously drive down the dollar and U.S. Treasury yields. Currently, the fundamentals of the U.S. stock market remain supportive, with the S&P 500's earnings growth in the second quarter significantly exceeding expectations, and trillion-dollar AI capital expenditures and wealth effects continuing to boost risk appetite. However, the market's bullish positions are extremely crowded, with Bank of America’s bull-bear indicator rising to 9.3, indicating a sell zone, and private client stock allocations reaching historic highs. If election outcomes, interest rates, or AI earnings expectations fall short, these crowded positions could amplify market volatility. Hartnett also cautioned that persistently rising U.S. Treasury yields and the pressure of servicing the country's massive debt are core constraints on market performance, noting that a significant easing of government debt servicing costs would require the 5-year U.S. Treasury yield to fall below 3.25%.