Another major bank warns! Is the AI boom cooling down?

Since the beginning of this year, the AI boom has boosted the stock prices of several large US technology companies and pushed the US stock market to recover.

On Monday, according to Bloomberg, Citigroup strategists Scott Chronert and others stated that the AI boom has provided some short-term upward momentum for the S&P 500 index, but this impact is expected to fade soon.

Chronert and other strategists still "basically believe" that based on mild recession expectations, the year-end target for the S&P 500 index is 4000 points, and the index is estimated to fluctuate in the range of 3800-4200 points. The strategists stated that the New York Fed's recession probability index is at its highest level since the double-bottom recession in the 1980s.

Citigroup believes that AI is currently a hot topic, but as it is "embedded in enterprise business models", the AI boom will gradually fade away.

Since the beginning of the year, the stock price of AI underlying computing leader NVIDIA has risen by more than 1.7 times, and its market value has once exceeded one trillion US dollars.

However, there have been recent reports that the Rothschild family, who have long been overweight on NVIDIA, have begun to "reduce" their holdings of NVIDIA. Its asset management agency, Edmond de Rothschild, stated that it has partially realized profits and now holds much less positions. Given that the valuation of AI is too high, it is becoming increasingly uncertain whether it will increase its holdings of AI technology stocks. If the valuation continues to grow, it will be more cautious.

Although recent surveys show that most Wall Street analysts expect NVIDIA to still have room for growth, Wall Street has also admitted that the valuation of AI is too high.

Two weeks ago, Michael Hartnett, the most accurate analyst on Wall Street's predictions last year and a Bank of America strategy analyst, stated in a report that the valuations of technology stocks and AI concept stocks are too high and recommended that investors sell US stocks.

Recently, Morgan Stanley strategists also predicted that the sudden decline in corporate profits will put the brakes on the rebound of the US stock market. According to Andrew Sheets and other strategists at Morgan Stanley, earnings per share of S&P 500 constituents will decline by 16% this year. This is currently one of the most pessimistic forecasts on Wall Street, in sharp contrast to the optimistic forecasts of Goldman Sachs and others, which expect moderate earnings growth this year.

Morgan Stanley predicts that the S&P 500 will fall to 3,900 points by the end of the year, a nearly 10% drop from last Friday's closing price of 4,282.37 points.