An AI ‘reality check’ may take the S&P 500 to 5,000. Here are the trades to make, this strategist says.

A strategist at Panmure Liberum, Joachim Klement, suggests the market may be due for an AI "reality check" that could send the S&P 500 toward 5,000. The core of his argument rests on a simple idea: expectations for artificial-intelligence spending have run well ahead of what companies may actually deliver, and the upcoming earnings season will be an early test of whether those expectations hold up.

Why does this matter beyond the headline? AI has been a dominant driver of index-level gains, so any sign that capital expenditure plans are being scaled back — or that revenue from AI products is arriving more slowly than hoped — could pressure the same megacap names that have carried the market. Conversely, evidence of durable spending would reinforce the current narrative.

For observers, the takeaway is less about any single trade and more about the calendar. Watch how companies frame AI budgets, timelines, and monetization during earnings calls. That language, not the strategist's target, is the real signal to track.