AI spending remains a market driver as stock performance shifts to fundamentals
Reichmuth & Co flagged AI capex as a key market driver, with stock performance increasingly tied to revenue gains and margin expansion.
Recent declines in some AI-linked stocks were seen as valuation normalization, not an end to the AI cycle; benefits are expected to broaden beyond chipmakers.
Equity leadership has rotated since mid-May from expensive U.S. tech and semiconductors toward pharmaceuticals and financials, shifting focus to earnings and cash flow.
Rising long-term U.S. Treasury yields, Middle East escalation risk, August-October seasonality, and U.S. midterm elections were seen as raising pullback odds.
The firm recommended selectivity, disciplined rebalancing, continued AI exposure; it favored pharma and biotech for defensiveness, and kept conventional energy as a hedge.
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