Wells Fargo upgrades US AI infrastructure stocks to neutral

Wells Fargo has upgraded its outlook on US artificial intelligence infrastructure companies from 'negative' to 'neutral'. This change comes after a significant decline in semiconductor stocks, which have dropped about 38% since June. The brokerage noted that current prices reflect much of the anticipated slowdown in AI-related earnings growth. Analysts at Wells Fargo indicated that semiconductor valuations suggest an annual earnings growth of approximately 8%. They also highlighted that AI-related investments contributed about eight percentage points to S&P 500 earnings growth over the past year. However, concerns remain about potential regulatory impacts following recent Democratic victories in US midterm elections. The brokerage cautioned that markets may not have fully accounted for the risks of an earnings downturn in 2028, as capital spending peaks and depreciation costs rise.