“AI Stocks Lose Steam in Recent Bull Market Run: Is This the End or a Buying Opportunity?”

Artificial intelligence stocks, which have been a hallmark of the recent bull market run, have lost steam over the past month. Companies like Nvidia, Microsoft, Alphabet, and Amazon have all seen their stock prices decline by more than 15% amid a broader market sell-off that has seen the Nasdaq Composite and the S&P 500 slide significantly.

Despite the recent downturn, some strategists believe that this is not the end of the AI run. BlackRock Investment Institute, for example, remains overweight on U.S. equities driven by the AI mega force and sees the selloff as presenting buying opportunities. They believe that growth will continue to support risk assets and that markets are pricing in too many Fed rate cuts.

Julian Emanuel from Evercore ISI, who holds the most bullish year-end S&P 500 target on Wall Street at 6,000, also remains optimistic. He sees the recent spike in the CBOE Volatility Index as an opportunity for patient buying and believes that quick spikes in volatility usually end with stocks higher a year later.

Emanuel likens the current moment to the large drawdowns seen in tech stocks during the “1994-99 Boom bull market” and sees the current “AI Air Pocket” as an opportunity to gain exposure to a long-term secular theme.

However, some investors have been staying away from large tech names due to rising valuations. The equity research team at Goldman Sachs points out that while the basket of large tech stocks has dropped sharply, earnings estimates have been moving higher. This has led to a contraction of valuation multiples for the group, but they still trade slightly higher than the 10-year median average.

Goldman Sachs chief US equity strategist David Kostin believes that the mega-cap tech stocks continue to reflect AI optimism despite investor concerns about the likely timing. Overall, the recent downturn in AI stocks may present buying opportunities for investors who believe in the long-term potential of artificial intelligence.

In conclusion, while AI stocks have faced a recent setback, some experts remain bullish on the long-term prospects of the sector. The current market conditions may provide buying opportunities for investors looking to capitalize on the potential of artificial intelligence in the future.