There are pockets of the market that look a lot more rational now, says BofA’s Savita Subramanian
Speakers
Savita Subramanian
— Head of US Equity & Quantitative Strategy, Bank of America
Summary
BofA's Savita Subramanian reaffirms her S&P 500 year-end target of 7,100, arguing that earnings gains and lower multiples have created healthier pockets of the market. She favors S&P 500 large cap value as seasonal downside protection and sees tech, semis, software, and hardware as more rational after the correction. Near term, she warns that lower buybacks and rising capex could create an air pocket for hyperscalers, and she is not yet publishing a 2027 target.
- Reaffirmed S&P 500 year-end target of 7,100.
- Sees a healthier reset in tech, semis, software, and hardware as earnings rise and multiples fall.
- Favors S&P 500 large cap value for seasonally turbulent markets.
- Notes large cap value has kept pace with large cap growth over the last one, two, and three years.
- Warns that reduced buybacks and higher capex may create a near-term hyperscaler air pocket.
- 2027 official target not expected until November.
Ideas
Earnings up; tech multiples down
Tech, semis, software, and hardware have seen a healthier reset: earnings and cash flow are healthy while multiples have come down, leaving pockets of the market more rational; she likes tech after the correction.
Favor large value, avoid index complacency
Heading into a seasonally turbulent period, the risk is being complacent in the index; she likes S&P 500 large cap value as downside protection and says investors can park there and set it and forget it. Large cap value has kept pace with growth over the last one, two, and three years and now includes tech, not just energy and financials.
Hyperscaler buyback air pocket looms
Companies are shifting from buybacks to capex, reducing a source of support for the market; she worries about a near-term 'show me the money' air pocket for hyperscalers even though she is bullish on the future.
