Banking giant Wells Fargo says it is playing the AI trade differently in 2026, while focusing on another sector it believes will benefit from the current macroeconomic backdrop.
In a new CNBC interview, Scott Wren, chief global equity strategist at Wells Fargo Investment Institute, says he’s looking at two sectors that can stand out as hyperscalers continue to demand greater compute capacity.
According to Wren, the bank’s focus for next year will move from mega-cap tech into sectors that will do most of the heavy lifting in the data center buildout.
“And we’re trying to look at the AI trade in a little bit different way. We like industrials. We like utilities. Clearly, somebody’s got to build the data center. Somebody has to upgrade the electrical grid. These utilities are going to see a real big surge in demand and probably some higher rates going forward. So we like those.”
But Wren notes that the firm is heavily favoring one sector above all else.
“And then we’ve also moved some money into financials. That’s really our most favored sector. A lot of financing, M&A (mergers and acquisitions), deregulation, better economy.”
He closes by pointing to his firm’s S&P 500 target as consistent with the bullish outlook.
“We’ve got a 7,500 target out there for a year in 2026. And I think that’s a really doable number in the type of economic environment that we expect.”
Wells Fargo is not the only banking titan to name financials as a favorite stock sector for next year. Morgan Stanley recently said that it also favors financials, industrials and healthcare, while picking software stocks over semiconductors.
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