An ex-Morgan Stanley strategist warns that links inside the AI trade could create risks across the stock market.
Adam Parker, now chief executive of Trivariate Research, says multiple sectors are tied more closely to AI semiconductors than many investors realize.
He highlights that holdings spread across financials, industrials, and power stocks may be less diversified than they appear.
“The biggest worrisome thing I see is the correlation between, you know, what’s called the alternative asset managers, even the big three, Goldman, Morgan Stanley, JPMorgan, and let’s say industrials like Eaton and Caterpillar and obviously power, GE Vernova, Vistra, Constellation. They are all highly correlated to AI semis.
So the challenge is you have these like different sector bets in your book, industrials, alternative asset managers, financials, semis, and power, and yet they’re all really correlated.”
Parker warns that if sentiment shifts, the unwinding could hit multiple corners of the market at the same time.
“So I think the real risk is that when that gets out of favor, a lot will roll over.”
Looking at equity market opportunities, he names one sector that’s coming to life and could be a solid AI play for next year.
“My view is that healthcare is the area where we’re going to see the most benefits on the productivity side from AI. I think a lot of that’s 2026 and 2027. We’ve been highlighting drug distributors like McKesson, Cencora, Cardinal, Quest, like businesses that have a lot of employees and low margins and therefore could benefit as they implement, you know, predicting their customer employee behavior better.”
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