A key rotation away from artificial intelligence stocks may be underway in the market.
According to Astoria Portfolio Advisors’ John Davi, a broader range of stocks are getting a “green light” because liquidity is returning to the system.
“The Fed cut rates four times last year. They cut rates twice already. They’re going to go again whether its December [or] January,” the firm’s CEO and chief investment officer told CNBC’s “ETF Edge” this week. “Historically whenever the Fed cuts interest rates, usually that’s a turn of a new cycle. Market leadership does tend to change quietly.”
He lists the latest performance in areas ranging from emerging markets to industrials. The iShares MSCI Emerging Markets ETF, which tracks the group, is up 17% over the past six months as of Wednesday’s close. The Industrial Select Sector SPDR Fund is up 9% over the same period.
“I think they can be a good offset to what’s an expensive large cap tech position, which dominates most portfolios,” he added. “We’re living in a structurally higher inflation world. The Fed is cutting rates like, why do you want to take so much risk in just seven stocks?” and
Davi prefers a global balanced approach to investing versus an overweight position in the Magnificent 7 — which is comprised of Apple, Amazon, Meta Platforms, Nvidia, Microsoft, Tesla and Alphabet, which has been trading around all-time highs. The Mag 7 makes up about a third of the S&P 500.
Sophia Massie, CEO of ETF-issuer LionShares, is also wary of going all-in on the AI trade.
“I think analysts have an idea of how much value AI will add to our economy. I don’t think we really understand how that’s going to play out between different companies yet,” Massie said in the same interview. “So, I have this sense that right now, we’re pricing in this probability that… one company may be the one that dominates, dominates AI and ends up being a big player in the future.”
https://www.cnbc.com/2025/11/27/green-light-away-from-ai-trade-two-etf-ceos-see-a-key-market-shift.html
