Fearing AI Bubble? Rotate to Other AI-Fueled Tech ETF Areas

Core Viewpoint - Concerns about a potential bubble in the artificial intelligence (AI) sector are rising, with a significant number of global fund managers believing AI stocks are in bubble territory according to Bank of America's October survey [1] Group 1: Market Sentiment and Performance - U.S. stocks have reached multiple records this year, driven by enthusiasm around AI spending and productivity gains, with the Nasdaq 100 trading at a forward price-to-earnings ratio significantly above the decade average [2] - Goldman Sachs strategists argue that fears of a tech bubble may be premature, attributing the current rally to strong earnings rather than speculation [3] - Francesco Sandrini from Amundi acknowledges irrational excitement in AI investments but believes there are still opportunities for returns through selective, reasonably valued bets [4] Group 2: Investment Strategies and Insights - Some investors are considering reducing exposure to major tech stocks after Nvidia's significant rally while maintaining diversified investments in the broader AI ecosystem [5] - Research indicates that hedge funds did not short the dot-com bubble but instead rotated between tech industries, outperforming the market by approximately 4.5% per quarter from 1998 to 2000 [6] Group 3: Areas for Investment - Amundi's Sandrini identifies software firms, robotics, and Asian tech stocks as high-growth opportunities that the market has yet to fully recognize [7] - The SPDR S&P Software & Services ETF (XSW) is highlighted for its strong buy rating, benefiting from the subscription-based demand for AI software, which is expected to remain robust [8] - The Invesco China Technology ETF (CQQQ) is noted for its potential growth due to China's heavy investment in AI and tech, with expectations of monetary policy easing that could benefit high-growth tech stocks [9]