AI train is moving to non-tech sectors like financials and health care: BofA's Savita Subramanian

Core Viewpoint - The AI rally is expected to expand into non-tech sectors, with potential beneficiaries in both direct AI applications and supply chain developments [1][2]. Group 1: AI Impact on Sectors - The AI trend is moving into power and utilities, leading to a significant rerating of stocks in these areas [3]. - AI is enhancing margins in labor-intensive sectors like healthcare, prompting an upgrade from underweight to overweight for healthcare stocks due to reduced margin risks [4]. - Various sectors of the economy are anticipated to benefit from AI advancements, although there are concerns about job creation in white-collar services, which could impact consumption growth [5]. Group 2: Market Conditions and Performance - The current market environment is characterized by high valuations, with the market cap to GDP of the S&P 500 reaching record highs, indicating an expensive market [7]. - There is an information vacuum regarding government data, leading to uncertainty about market conditions and potential underperformance from companies increasing capital expenditures [8][9]. - The near-term outlook is bearish, with a year-end target set below current levels, reflecting concerns about tariff and policy uncertainties affecting capital commitments and hiring [9][10][11].