Wells Fargo is warning that a few factors could cause a downturn in the stock market, particularly for AI stocks.
Consolidation, Not a Crash?
Chris Harvey, Wells Fargo’s head of equity strategy, thinks the market is more likely to consolidate than to crash. He expects the Federal Reserve to lower interest rates soon, which could impact investor behavior. He’s not sure what will happen in the short term, but he believes the market’s underlying fundamentals remain strong. He also suggests that better-than-expected deficit numbers, potentially boosted by recent tariff news, could influence interest rates.
Good News, Bad News for AI Stocks
Interestingly, Harvey believes good economic news could actually hurt AI stocks. If the Fed cuts rates and the economy performs better than expected, investors might shift their focus away from AI to other, potentially higher-reward investments. This “rotation” is a major concern for AI.
AI Stocks in the Spotlight
This potential shift could affect major players in the AI space, including companies like Nvidia, AMD, Palantir, Microsoft, Meta, and Google.