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(Bloomberg) -- Bridgewater Associates co-chief investment officer Karen Karniol-Tambour said she favors equities over bonds as the resilient economy threatens to keep inflation elevated.

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“You are, on the margin, more likely to get a strong growth and stronger-than-expected inflation environment,” the executive said Tuesday at the iConnections Global Alts conference in Miami Beach. “But that could change quickly because with the amount of policy uncertainty you have, it’s not hard to imagine one policy change really tilting us in terms of the macro environment.”

The US stock market is steadying Tuesday from the technology selloff that hammered it Monday, when the rollout of a Chinese artificial-intelligence platform fanned concerns about the lofty valuations of Big Tech companies that had surged on speculation they will come to dominate the new industry.

Karniol-Tambour, who helps oversee the world’s largest hedge fund, said the bar has been raised for US firms and flagged the risks of a market whose gains have been driven by a narrow range of stocks.

While American companies have been better at producing profits and returning money to shareholders, that’s also resulted in high expectations being baked into their stock prices.

The Bridgewater executive estimated that US companies need to post earnings growth of roughly 9% to justify current valuations, compared with 2%-3% elsewhere. She said while that is a high but “not impossible” threshold for American firms to meet, it also underscored the case for shifting some cash to other markets.

Earnings of S&P 500 Index companies are expected to climb 12% in 2025, according to Bloomberg Intelligence data.

“The bar for the US to keep being the outperformer has risen relative to what it was because of this period of massive outperformance,” she said. “It’s an attractive time to take risk spread across a lot of countries, especially with the amount of geopolitical tension that we have and the probability that correlations across countries will go down and you’ll get the benefit of that diversification there.”

She said Monday’s rout, which wiped $589 billion from the value of Nvidia Corp. and sent peers tumbling, highlighted the need to be more diversified within equities.