Slide in AI stocks renews warning about tech-heavy portfolios
After the worst trading day in 19 months in the US, experts interviewed by CNN advocate diversifying; the report cautions that this does not mean fully abandoning AI stocks.
Translated from the Portuguese original by the Panorama newsroom. Read in Portuguese
Summary written by the Panorama newsroom from the sources listed below. Facts are attributed to the original publications.
The sharp drop in artificial intelligence-related stocks on Thursday served as a warning for investors whose portfolios rely heavily on the sector, CNN en Español reported. That day, the Dow Jones, the S&P 500 and the Nasdaq each had their worst performance in 19 months.
According to the report, the Democrats' sweeping victory in the US midterm elections heightened fears that moratoriums and other regulatory hurdles could slow the construction of AI data centers, one of the drivers of the market's recent rally.
CNN illustrates the scale of that dependence: chipmakers account for nearly a fifth of the S&P 500's market value, and the index's ten largest stocks, nine of them tech companies, make up close to 40% of that value. Between November 2022, when OpenAI opened ChatGPT to the public, and Thursday's plunge, the S&P 500 rose 88%, leaving many portfolios and 401(k) retirement plans heavily exposed to AI.
For Arun Sundaram, senior vice president at CFRA Research, the sell-off works as a wake-up call for those who have drifted away from a balanced portfolio. The managers consulted recommend staying calm and avoiding panic selling.
David Bailin, founder of CIO Group, cited healthcare stocks, long-term bonds, certain exchange-traded funds and actively managed futures funds as alternatives. The report also mentions gold, high-quality bonds and cash equivalents as ways to diversify.
The report cautions, however, that the point is not to dump all AI stocks, but to balance that exposure with sectors less tied to technology, such as healthcare and consumer staples.