S&P 8000 target, AI concentration risk, and market broadening (with Jonathan Ferro, Lisa Abramowicz, Amarie Hordern)

4/18/2026 1:11:48 AM	medium term cautious up	21 days later	+10.27%	+5.13%
11/7/2025 7:00:46 PM	short term cautious down	7 days later	-3.17%	+1.58%

Stocks look to bounce back from a week of tech jitters; asks about the path to 8,000 on the S&P.

Jonathan Ferro

Alicia Levine

The path to 8,000 is earnings broadening beyond AI beneficiaries across the S&P. Multiples are not high at 21x forward earnings with 17% growth expected next year. Volatility and consolidation are expected due to parabolic charts in memory names.

Following two strong years with a multiple that seems fine, but some charts are parabolic, particularly memory names, which will pull the market down as they are current leaders.

Alicia Levine

Hyperscalers (Microsoft, etc.) have lagged and look terrible on charts, but management likely won't let businesses decline. The $800B capex from five companies funds EPS of 60 companies, pulling capital from spenders to recipients. The key question is how long this funding can continue and what the reversion rate is.

The market is telling hyperscalers to cut back on capex, yet AI beneficiaries still move higher, creating schizophrenia. At some point, capex growth will slow, negatively impacting AI beneficiaries and benefiting hyperscalers.

Alicia Levine

The pushback is greatest in hyperscalers because the fundamental question is whether spending can justify businesses in 3-4 years. Business models have changed from bond-equivalents with high free cash flow to companies selling debt, reflecting a different business model in equity prices.

Two or three hyperscalers are selling debt, not just equity, which is a very different business model.

Alicia Levine

Correlations are everywhere: 20% of the S&P drives earnings of the rest, funded by six companies. The bond market reflects AI as hyperscalers fund with debt. 50% of the EM index (South Korea, Taiwan) is now AI. This creates concentrated risk in AI across all asset classes in a diversified portfolio.

As an asset allocator, one must hedge that risk. Infrastructure and real assets are a must in a higher inflationary world. Europe is not the AI play, so EM exposure must be paired carefully with US exposure.

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