Wall Street Oracle Predicts 6,800-7,000 S&P 500 by Year-End, Bullish on AI

A prominent financial research firm, known as the "Wall Street Oracle," has maintained its bullish stance on the U.S. stock market, emphasizing the significant long-term growth potential of artificial intelligence (AI). The firm's co-founder and research director highlighted that AI applications are still in their nascent stages, comparing this phase to the decades-long expansion of the wireless communication industry, which grew from 37 million users to 7 billion users.

During the market downturn in the U.S. from February to April, the firm conducted an assessment to determine whether the economic fundamentals warranted panic. The strategist concluded that holding positions or buying on dips was the appropriate strategy during the spread of fear. The firm projected that the S&P 500 index would reach 6,800 to 7,000 points by the end of the year.

The firm drew parallels between current AI infrastructure investments and historical technological developments, such as the laying of underwater fiber optic cables by Global Crossing. The current phase focuses on building large language models and data centers, similar to the infrastructure development in wireless communication before application development. This pattern suggests that while early investors may face challenges, new opportunities typically emerge as the technology matures.

Addressing concerns about the lack of immediate returns from significant corporate investments in AI, the firm explained that this mirrors the typical technology adoption cycle. Using the example of Global Crossing, the firm noted that "the second owner of the hotel made a lot of money," implying that value often accumulates in later participants after initial infrastructure investments.

The firm also highlighted that the current focus of AI is shifting towards safety and verification systems, which is the next wave of development before widespread commercial applications. The firm expressed confidence that major financial institutions will soon leverage AI to enhance their business strategies.

In summary, the firm reiterated that there are many positive factors to look forward to in the future. Despite short-term market volatility and investment concerns, the AI revolution holds immense long-term growth potential. The firm's optimistic outlook underscores the belief that AI will continue to drive sustained growth in the U.S. stock market, positioning it as a key driver of future economic prosperity.