Trading artificial intelligence can cause investors to suffer huge losses.
Evercore ISI’s Julian Emanuel warns that big tech concentration in the S&P 500 has reached extreme levels.
“The AI revolution is probably pretty real, and pretty important. But…these things roll out in waves, and the stock sells off a little too hot,” said the company’s senior managing director at CNBC. said on ‘Fast Money’ on Monday.
In a research note released this week, Emanuel cited Microsoft, Apple, Amazon, Nvidia, and Alphabet, the parent company of Google, as concerns over name clustering.
“two thirds [of the S&P 500 are] We’re driven by these top five names,” he told host Melissa Lee.
Emmanuel reflected on “weird conversations” over the past few days with people who see big tech stocks as a haven.
“[They] I actually look at treasury bills and wonder if they are safe. [They] Looking at over $250,000 in bank deposits, I wonder if they are safe and fund the top five big tech companies,” said Emanuel.
Emanuel said it is of particular concern because of the bullish activity that occurs when small-cap stocks are crashing. The Russell 2000, under pressure from local banks, is nearing October lows.
To prevent losses, Emmanuel is overweight cash. He finds his 5% yield attractive and plans to cash in during the next market downturn. He believes that will be driven by the debt ceiling turmoil and economic turmoil over the next few months.
“We want to stay in more defensive sectors. Interestingly, in all of this AI talk, healthcare and consumer essentials have outperformed since April 1,” Emmanuel said. rice field. “They will continue to outperform.”
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