'A return to optimism': Wall Street strategists are bullish on the AI trade

Wall Street strategists are increasingly bullish on the AI trade as chip stocks power markets to record highs. Nvidia’s surge (a $5 trillion market cap) and a stunning single-day rally in Intel have reignited demand for CPUs and AI infrastructure, lifting the PHLX Semiconductor Index to an 18-session winning streak and pushing major indices higher. Analysts point to hyperscaler spending (about $650 billion this year) as a structural tailwind, prompting upgrades (e.g., AMD) and recommendations to tilt portfolios toward firms that benefit from AI-related capex. Goldman Sachs expects the S&P 500 to reach 7,600 by year-end and favors companies tied to AI infrastructure and power. Overall market impact: renewed optimism around AI-driven earnings growth is supporting broad equity leadership in semiconductors and related tech suppliers, with strategists advising exposure to AI-levered names while monitoring cyclical peak timing.