Wells Fargo upgraded its view on US AI infrastructure companies to neutral from negative, saying a semiconductor selloff improved the sector’s risk-reward profile. The brokerage said semiconductor shares had fallen about 38% from June highs and estimated AI-related capital spending added about eight percentage points to S&P 500 earnings growth over the past year.
Wells Fargo upgraded its view on US AI infrastructure companies to neutral from negative, saying the sharp semiconductor selloff had improved the sector’s risk-reward profile despite concerns about a slowdown in AI spending. Analysts led by Ohsung Kwon said in a note that “risk-reward is reasonable.”
Semiconductor shares had fallen about 38% from their June highs, and Wells Fargo said current valuations implied earnings growth of roughly 8% year over year. It estimated AI-related capital spending added about eight percentage points to S&P 500 earnings growth over the past year, with that tailwind expected to continue in 2027 but largely disappear in 2028 as spending growth slows and depreciation costs rise. The brokerage also flagged a potential earnings downturn from peak capital spending and additional supply in 2028, which it said was not priced in.
