Stifel: U.S. economy experiencing "overheating expansion," with the AI investment cycle outweighing consumer pressure

BlockBeats news, on June 25, the large diversified financial services holding company Stifel in the United States raised its year-end target for the S&P 500 and provided a stock allocation framework centered on a "high growth, high inflation" environment.

The company raised its year-end S&P 500 target to 7,800 points, believing that the US economy is entering a "running hot" state, meaning that while economic growth is strengthening, inflationary pressures are also increasing. Stifel's model shows that US growth momentum is strengthening, while inflation momentum is also significantly overheating, which will alter the leading market structure in the second half of the year.

Stifel is most optimistic not about traditional consumer sectors, but about investment-oriented cyclical industries, including banking, transportation, materials, energy, semiconductors, software, and equipment. The bank believes that AI fixed asset investment is still expanding, and the combined capital expenditures of major tech companies such as Amazon, Microsoft, Meta, and Google are expected to reach about $725 billion in 2026, about $100 billion higher than previously expected.

This means that the AI investment chain may continue to outperform the consumption chain squeezed by inflation. Stifel advises investors to reduce reliance on consumer discretionary, consumer staples, communication services, and some financial services, as these areas have weaker profit revisions. Instead, the bank prefers cyclical value stocks and hedges with defensive value sectors such as insurance, automotive, energy, and banking.