BofA stays bearish on S&P 500, says take profits in growth and rotate into large-cap value

BofA keeps its 2026 year-end S&P 500 target at 7,100, arguing the bullish liquidity, buyback and fund-flow supports that peaked in 2025 are now reversing. The bank says investors should favour large-cap value and cyclicals, particularly Financials, Energy and Materials, as AI capex, manufacturing activity, benign credit spreads and lower oil support cash-generative “old economy” sectors. BofA sees weaker risk/reward in secular growth and hyperscalers, noting AI spending limits capex flexibility, buybacks are constrained by weaker cash flow, and investors are paying near-record premia for long-term growth.