Wells Fargo analysts are predicting another strong corporate earnings season, driven largely by companies tied to artificial intelligence and semiconductors.

According to the bank’s latest equity outlook, U.S. firms are on track to outperform expectations in the third quarter despite lingering macroeconomic uncertainty.

In an interview with CNBC, Wells Fargo’s head of equity strategy explained that the bank’s proprietary machine learning models – built on more than 350 macroeconomic indicators – are pointing toward a 4% average earnings beat across the S&P 500. “The data continues to show a solid performance, particularly from AI-linked and chip-related companies,” the strategist said.

While investors remain focused on the Federal Reserve’s policy direction, the strategist emphasized that AI innovation now plays a bigger role than interest rates in driving market momentum. “For overall growth, it’s really about AI rather than the Fed,” he noted.

The report also highlights a clear market rotation. Ahead of the Fed’s shift toward looser monetary policy, investors had piled into rate-sensitive sectors such as small caps and homebuilders. But now, as rate cuts are officially underway, traders appear to be “selling the news” and redirecting capital back into technology and AI stocks.

“AI continues to dominate the narrative,” the strategist added. “Beyond that, there isn’t much that excites us right now.”