One signal

Wells Fargo has shifted its outlook on US AI infrastructure stocks from Negative to Neutral after semiconductor shares fell about 38% from their June highs, Coinpaper reports. The bank’s analysts say prices now reflect slower earnings growth, not that every AI stock is suddenly a bargain.

The more awkward part for the AI boom is the earnings outlook: Coinpaper says Wells Fargo estimates AI-related capital spending added about eight percentage points to S&P 500 earnings growth over the past year, but warns that contribution could largely disappear in 2028 as investment growth slows and depreciation rises. A less gloomy rating is not a clean bill of health. The key question is whether demand for computing can keep delivering returns once the spending itself stops doing so much of the work.

Discuss: Should investors treat the semiconductor sell-off as a buying opportunity, or as an early warning that AI infrastructure spending has outrun its returns?

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