'Stay Long Detroit, Short Davos': Why BofA's Hartnett Sees A Main Street Boom Ahead Of The Midterms
AI hyperscalers are expected to spend $670 billion on capex in 2026, consuming 96% of their cash flow, compared with roughly $150 billion or 40% of their cash in 2023.
That changes everything.
The leaders of the 2020s — the Magnificent Seven — are no longer the cleanest balance sheets in the market.
They're no longer the biggest buyback engines.
According to Hartnett, Wall Street isn't abandoning AI — it's rotating from AI spenders to AI beneficiaries, from services to manufacturing, from hype to cash flow.
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A Familiar Pattern: Big Events, Big Market Regime Shifts
Hartnett sees a historical pattern where major global events trigger long-term shifts in market leadership.
From gold after Bretton Woods to bonds in the Volcker era, U.S. stocks during globalization, commodities after China's WTO entry, and megacap tech after COVID, leadership has consistently rotated following big events.
He sees 2025 as the next inflection point, marking a shift away from U.S. exceptionalism toward global rebalancing.
In this new cycle, Hartnett expects U.S. small and mid-cap stocks, financials, regional banks, REITs, and real assets to outperform, alongside international equities, China's consumer sector, and emerging market commodity producers.
Conversely, he warns that high-valuation, asset-light Big Tech leaders face rising risk as capital rotates toward more traditional, income-generating parts of the economy.
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This article 'Stay Long Detroit, Short Davos': Why BofA's Hartnett Sees A Main Street Boom Ahead Of The Midterms originally appeared on Benzinga.com
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