After tech stocks' "Black Week," Wall Street calls for "buying the dip"

US midterm election results triggered sharp stock market swings, with tech stocks taking a heavy hit, but several Wall Street strategists quickly issued buy signals, viewing the selloff as an entry opportunity rather than the end of the bull market. On Thursday, the S&P 500 plunged 4.4% in a single day, and the Nasdaq 100 tumbled 6.4%, wiping out more than $3 trillion in market value. The trigger was that Democrats swept the Senate, the House of Representatives and multiple gubernatorial races, with many winning candidates pledging to restrict data center construction and strengthen industry regulation, fueling market concerns that AI infrastructure investment will be suppressed by policy. On Friday, the S&P 500 rebounded modestly by 0.3%, but since the election results came out on Tuesday, the index has still fallen 2.5% cumulatively. According to a Bloomberg report on November 7, Morgan Stanley Chief U.S. Equity Strategist Mike Wilson stated explicitly that "the next two to three weeks are the time to add exposure," and maintained his year-end S&P 500 target of 8,000 points, implying about 8.4% upside from Friday's close. Yardeni Research Chief Investment Strategist Ed Yardeni likewise characterized the decline as a "correction" rather than a bursting bubble, with a year-end target of 7,900 points. Election results exceeded expectations, catching Wall Street off guard The intensity of the selloff caught most Wall Street trading desks by surprise. On Wednesday, after the election results were announced, the S&P 500 rose as much as 1.6% at one point, and several institutions were still advising clients to buy on dips. Scott Rubner, head of equity and derivatives strategy at Goldman Sachs, wrote in a client note on Wednesday that "investors have ample room to rebuild risk exposure, and as uncertainty fades and the market's largest buyer group gradually returns, the path of least resistance for U.S. stocks remains upward through year-end." Yet just one day later, the situation took a sharp turn for the worse. At Thursday's close, the S&P 500 lost more than $3 trillion in single-day market value, a decline so large that earlier optimistic forecasts looked overly hasty. Despite the heavy blow, most strategists did not waver. According to Bloomberg-compiled data, the average year-end S&P 500 target among major Wall Street institutions is 7,973 points. Jonathan Golub, chief equity strategist at Seaport Global Holdings, set the most bullish year-end target at 8,200 points. "It would be unwise to rush for the exits after the market makes a minor adjustment to the election results," he said. "I am a firm buyer." Ed Yardeni said on Thursday that "we have been through an AI bubble, and the bubble is slowly deflating, but deflating does not mean bursting bursting means a major negative shock to the economy, and I don't think that will happen." He added that he had previously anticipated buying opportunities after the election, "and now we are starting to see some pretty good opportunities." AI trade under pressure, semiconductor index down more than 30% from its high The core issue behind the decline is the market's repricing of the outlook for AI investment. The Philadelphia Semiconductor Index plunged 12% on Thursday alone and is now down 36% cumulatively from its June high. Ohsung Kwon, chief equity strategist at Wells Fargo, noted that "the semiconductor and AI infrastructure trade has been the main force supporting the market this year, and this sector will remain under pressure. For the market to move higher from current levels, it needs contributions from high-beta trades." Kwon's year-end target is 7,700 points, relatively conservative among major institutions. However, Kwon also suggested that if concerns about shrinking AI investment continue to build, tech giants such as Alphabet and Amazon could actually gain some support the market expects these companies to be forced to cut capital spending, thereby improving earnings expectations. "We don't want to be overly bearish here," he said. Whether the S&P 500 can stage a year-end rebound still hinges most critically on the direction of the AI trade. Several strategists believe the selloff is a signal that the recent correction is nearing its end rather than a precursor to the end of a four-year bull market, but whether that judgment holds depends largely on the actual policy impact on AI infrastructure investment. This article is reprinted from "Wall Street See" (Wallstreetcn), author: Dong Jing; GMTEight editor: Liu Jiayin.