A JPMorgan Chase strategist says volatility around the artificial intelligence trade is likely to persist, but the playbook for investors remains familiar.
In a Bloomberg interview, Erik Wytenus, head of EMEA Investment Strategy at JPMorgan Private Bank, says the current “AI fear trade” reflects a broader pattern seen in past waves of technological disruption.
“There’s no doubt that there’s going to be some winners and losers through this era of disruption in terms of AI. And that is actually commonplace with disruptive and new technologies over time. So in that respect, it’s probably not going to be that different from many of these other big advancements and industrializations over time.”
Wytenus says the key for investors is to be selective, targeting names that can still generate cash flow even amid AI disruption.
“I think [it’s important] to be nimble, to be focused on companies that ideally have resilient business models, that have proven ability to generate cash flow into the future and can adapt with the time.”
The market strategist also says investors should buckle up as he doesn’t see volatility dissipating soon.
“So this type of volatility and back and forth that we’re seeing in markets is a bit of a byproduct of research reports and focusing on what’s happening with the AI trade. It’s the kind of thing we’ll probably continue to see in the weeks and months to come.”
Wytenus’s comments mirror the view of Altimeter chief executive Brad Gerstner. Earlier this month, Gerstner said that investors are penalizing software names because their future free cashflows are no longer predictable because of AI. He added that the only way to reverse the trend is to show that AI is accelerating their core businesses.
Disclaimer: Opinions expressed at CapitalAI Daily are not investment advice. Investors should do their own due diligence before making any decisions involving securities, cryptocurrencies, or digital assets. Your transfers and trades are at your own risk, and any losses you may incur are your responsibility. CapitalAI Daily does not recommend the buying or selling of any assets, nor is CapitalAI Daily an investment advisor. See our Editorial Standards and Terms of Use.