The AI sell-off rocked Wall Street last week. Why it sets up the market for a big year-end rally

Wall Street’s sharp pullback last week—driven largely by AI-related stocks—may set up a rebound for the rest of the year, several strategists said. The S&P 500 fell 2.7% for its fourth straight weekly decline, while the Nasdaq Composite dropped 3.4%, sliding more than 10% from a record set in the prior month and entering correction territory. Morgan Stanley’s Michael Wilson argued the correction is near its final phase as the S&P catches up to market breadth, suggesting a final retest of last week’s lows could fuel a year-end rally. Wilson has an S&P 500 target of 8,000. JPMorgan’s Mislav Matejka said the AI selloff may be overdone, citing extreme P/E compression and opportunities if tech stabilizes.