The financial world is abuzz as experts caution that the S&P 500 could drop over 35% to 5,000 by the end of 2027 if the AI boom fizzles out. Analysts Joachim Klement and Francisca Reis from Panmure Liberum emphasize the importance of keeping a close eye on hyperscaler spending as we approach the earnings season. ㅤ With hyperscaler capital expenditures potentially hitting $1.2 trillion in 2027, a downturn in the AI sector could significantly impact the benchmark's value. This comes amid rising capital-spending dilemmas and potential rate hikes from the Federal Reserve and Bank of England. In this uncertain climate, Klement suggests pivoting towards defensive sectors like food producers, retailers, and pharmaceuticals, while exercising caution with utilities tied to AI energy demand. ㅤ As we approach Q3 earnings, investors are urged to prepare for a "critical reality check" that could reshape market dynamics. ㅤ With the S&P 500 recently closing at 7,722.72, the stakes are high, and the f...