Stifel: The US economy is experiencing an "overheated expansion," with AI investment cycles outpacing consumer pressures.

According to Mars Finance, on June 25th, Stifel, a large diversified financial services holding company in the United States, raised its year-end target for the S&P 500 and provided a stock allocation framework centered around a "high growth, high inflation" environment. The bank raised its year-end target for the S&P 500 to 7,800 points, believing that the US economy is entering a "running hot" phase, meaning that while economic growth is strengthening, inflationary pressures are also rising. Stifel's model shows that US growth momentum is strengthening, while inflationary momentum is also significantly overheated, which will change the market's leading sectors in the second half of the year. Stifel is most optimistic about investment-oriented cyclical industries, including banking, transportation, materials, energy, semiconductors, software, and equipment, rather than traditional consumer sectors. The bank believes that AI fixed asset investment is still expanding, with large technology companies such as Amazon, Microsoft, Meta, and Google expected to have a combined capital expenditure of approximately $725 billion by 2026, higher than the previous forecast of approximately $100 billion. This means that the AI investment chain may continue to outperform the consumer chain squeezed by inflation. Stifel advises investors to reduce their reliance on consumer discretionary, consumer staples, communication services, and some financial services, as these sectors have weaker earnings revisions. Instead, the bank favors cyclical value stocks and hedges with defensive value sectors such as insurance, automobiles, energy, and banking.