Wells Fargo Forecasts Broad Year-End Rally Amid AI Spending Concerns and Tariff Catalyst

This analysis is based on the CNBC “Closing Bell” interview [1] with Ohsung Kwon, Wells Fargo’s chief equity strategist, published on November 11, 2025, where he presented a comprehensive bullish forecast for year-end market performance. Kwon’s thesis builds on his previous appearance on BNN Bloomberg [2], outlining a multi-faceted catalyst framework supporting his “everything rally” prediction.

Current market data [0] shows mixed performance around Kwon’s forecast. The S&P 500 closed at 6,856.68 on November 12, 2025 (-0.16%), while the Dow Jones Industrial Average demonstrated strength at 48,336.82 (+0.67%). However, the NASDAQ Composite underperformed at 23,403.52 (-0.68%), indicating sector-specific divergence rather than the broad-based rally Kwon anticipates [0].

Kwon’s optimism rests on five key pillars [2]: historical seasonality favoring November-December performance, exceptionally strong earnings season with 75% of companies beating EPS estimates (the widest beat in four years), potential $160 billion in tariff refunds from a Supreme Court ruling expected in January, increased tax returns potentially providing $800 more per person than last year, and the positive catalyst of government reopening after a 43-day shutdown [3].

A critical nuance in Kwon’s analysis concerns AI spending patterns. While acknowledging that hyperscalers’ free cash flow margins have deteriorated due to heavy investment requirements, he identifies this as creating opportunities for AI semiconductor companies, power providers, and other capital expenditure beneficiaries [2]. Importantly, Kwon characterizes much current AI spending as “maintenance capex” required for competitive positioning rather than growth capex, raising questions about return on investment.

Current sector performance reveals a concerning divergence from Kwon’s broad rally thesis. Communication Services (+1.22%) and Basic Materials (+0.53%) show strength, while Technology (-1.00%) and Energy (-1.22%) underperform [0]. This rotation from growth to defensive sectors may reflect investor skepticism about the sustainability of AI-driven growth without clear returns.

Kwon’s trading strategy around the Supreme Court tariff ruling involves sophisticated timing: pre-ruling investment in consumer and industrial stocks as refund beneficiaries, followed by selling the news post-ruling due to potential alternative tariff implementation methods [2]. This 70% probability assessment of tariff repeal creates significant event risk around the January timeframe.

The emphasis on companies needing to “show return on spend” suggests growing market discipline regarding AI investments. With the S&P 500 trading near resistance levels and technology stocks underperforming, investors may be increasingly discriminating about capital deployment, particularly in AI-related investments where clear ROI metrics remain elusive.

• Supreme Court Ruling Risk
  : A ruling against tariff repeal could eliminate the $160 billion stimulus catalyst, potentially triggering market disappointment
• AI Spending Sustainability
  : If hyperscalers reduce capital expenditures without demonstrating returns, growth stocks could face significant pressure
• Valuation Resistance
  : S&P 500 at current levels may struggle to advance without stronger earnings growth confirmation
• Sector Rotation Acceleration
  : Current technology underperformance could intensify if growth concerns spread to other sectors

• Tariff Refund Beneficiaries
  : Consumer and industrial stocks positioned to benefit from potential $160 billion in refunds
• AI Infrastructure Plays
  : Semiconductor companies and power providers likely to benefit from continued AI capex regardless of ROI concerns
• Seasonal Laggards
  : Historical November-December seasonality favors catching-up opportunities in underperforming sectors
• Government Reopening Effects
  : End of 43-day shutdown [3] may create short-term stimulus opportunities in affected sectors

The January Supreme Court ruling creates a critical timing inflection point. Short-term positioning (next 2-4 weeks) should focus on tariff refund beneficiaries, while medium-term strategy (through year-end) requires monitoring Q4 earnings results and holiday retail performance for confirmation of economic strength.

The market context shows Wells Fargo’s WFC stock trading at $86.94 (+0.86%), near its 52-week high of $88.64, suggesting market confidence in the bank’s outlook [0]. Kwon’s forecast of S&P 500 reaching 7,100 represents approximately 3.5% upside from current levels, requiring the realization of his five catalyst framework.

The strong earnings season, with 75% of companies beating estimates, provides fundamental support for the rally thesis [2]. However, the current sector performance divergence, particularly technology weakness, indicates market skepticism about the sustainability of broad-based gains without clear evidence of AI investment returns.

The government shutdown resolution [3] combined with potential tax return increases and tariff refunds creates a multi-layered stimulus scenario that could fuel consumer spending and corporate investment. However, the complex interplay between these factors and the January Supreme Court ruling introduces significant timing and outcome uncertainty.

Investors should monitor key indicators including S&P 500’s ability to break above 6,900 resistance, technology sector stabilization, and consumer/industrial sector performance as leading indicators of whether Kwon’s “everything rally” thesis will materialize by year-end.