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LivestreamMenuFor investors looking to steer clear — or pare exposure — to the artificial intelligence trade amid so much boom-induced volatility, there are some alternatives. Investors and analysts are increasingly looking to other parts of the market, both to find neglected sources of value and to start assuming a defensive posture against a possible downturn. “I’m active personally in my trading portfolio in buying protection, and it’s cheap,” Dan Alpert, managing partner of Westwood Capital, told CNBC. “It’s very cheap. It’s ridiculously cheap. It’s almost too cheap, because the consensus is so far tipped to one direction.” The AI trade has also experienced a break over the past month across data centers and infrastructure, semiconductors and memory components. The Global X Data Center and Digital Infrastructure ETF (DTCR) is down more than 10% from a month ago. The PHLX Semiconductor index (SOX) is down around 12%, and the Roundhill memory ETF (DRAM) is has lost nearly 20%. With that, UBS put together a list of 40 buy-rated stocks this week that they think offer solid diversification away from AI. Here are 10: “Many high-quality operators with defensive attributes have fallen out-of-favor,” Joseph Parkhill at UBS wrote to clients Wednesday. “In many cases, the underperformance of quality defensives has been in spite of fundamentals remaining resilient, leading to significant valuation de-rating.” Most of the companies highlighted by UBS fall into traditional value sectors for the stock market during downturns. These include McDonald’s and PepsiCo., as well as financials represented by brokerage Charles Schwab and financial information company S & P Global . The list also features some software names, including Thomson Reuters and SS & C Technologies that many analysts think have solid fundamentals. Thomson Reuters is up more than 20% over the past month, and SS & C is up close to 3%. Defensive positioning against the popping of the AI bubble extends beyond equities. “You know what else is really cheap? The 2-year. If you believe that the 2-year is tied completely to the policy rate, and the policy rate is not going to go up but probably be cut, and even if it stays stable, you win, because the protection is so cheap,” Alpert of Westwood Capital said.Read More
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