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AI Rally: Experts Advise Trimming Stock Exposure
25 Sep
Summary
- Fund managers suggest reducing exposure to AI stocks after significant gains.
- Long-term positive impact of AI on economy remains, but caution advised.
- Diversification is key to absorbing potential regulatory shocks.
Mihir Vora of Trust Mutual Fund and Prashant Khemka of WhiteOak Capital Group are advising investors to consider reducing their exposure to AI-related stocks after a substantial rally.
Despite the recent surge, both fund managers maintain a positive outlook on the long-term economic benefits of artificial intelligence. However, they suggest trimming current positions to manage portfolio concentration, allowing investors to still hold more shares than before the rally.
Vora emphasized the growing reliance of U.S. economic growth and financial markets on AI-driven capital expenditures, particularly in data centers and energy infrastructure. He cautioned that any questions about AI's growth could impact the broader ecosystem.
Diversification is presented as a vital tool for navigating potential regulatory shifts, according to Vora. He noted that regulatory changes in sectors like insurance appear aimed at increasing efficiency and benefiting consumers.
Both experts also find opportunities in capital-market businesses, citing growing household savings and financialization. Vora's interests include exchanges, brokerages, and wealth managers, with a particular focus on commodity exchanges. Khemka views exchanges as attractive due to their monopolistic or duopolistic nature and benefits from capital formation.
Khemka identified healthcare and selected industrial businesses as key investment areas. Vora remains optimistic about industrials, capital goods, and construction, along with long-term themes in power transmission and defense, asserting that India will continue to be a market for astute stock pickers.
