Chip Stocks Rally in AI Trade Revival After Plunge

• RBC's S&P 500 12-month price target is 8150, based on a median of five models, with earnings strength offsetting PE compression.
• Short-term tactical risks like mid-term elections, 2027 earnings growth expectations, and interest rate fears could lead to a 5-10% market drawdown at worst.
• AI's influence is broadening beyond the 'Mag 7' and semiconductor companies, impacting other sectors like energy (powering data centers).
• The financial sector is seen as attractive due to reasonable valuations, good earnings revisions, and potential benefit from stabilizing consumer sentiment.

RBC Capital Markets maintains a longer-term bullish outlook for the S&P 500, with a 12-month price target of 8150, driven by strong earnings growth offsetting valuation pressures from rates and inflation. They see AI's influence broadening beyond chipmakers and note corporate America's resilience, with the financial sector also looking attractive.