Mike Wilson on a late-stage correction and AI users as the next trade

On Squawk Box, Wilson described the correction, which started in June as a rotation from early- to mid-cycle, as being in its final innings. He cited the unwinding of momentum, concern over AI capex sustainability, two ongoing wars, and midterm election anxiety as factors the market has digested.

Market breadth has been poor, which Wilson read as a sign that selling is close to exhausted. The market has 2–3 weeks left to get through before the year can finish strongly and carry into next year.

Capital is rotating away from enablers, including semiconductors and power stocks that benefited from the buildout, toward companies that adopt the technology, Wilson argued. Spending has been incredible and AI winners are being separated from losers, but the economics for all players remain uncertain.

Rates are higher mainly because growth has been much stronger than expected, not because of oil. Earlier this year the market expected the Fed to cut, but growth surprised to the upside and the Fed responded.

Distortion from inventories skewed the headline GDP print, according to Wilson. Stripping that out, growth was stronger than desired.

Asked whether market breadth will improve, Wilson said the expansion earlier in the year was early-cycle and differs from what he expects next. He believes a broadening will come once the S&P makes its final move through the correction.