BlackRock says investors chasing the AI trade should widen their focus to other powerful market themes.
In a new interview with Fox Business, BlackRock head of equity ETFs Jay Jacobs says diversification remains the central rule of long-term investing, even as AI continues to dominate attention.
Jacobs says investors can still benefit from the rise of AI, but warns that concentration in the Magnificent Seven stocks has left many portfolios overly exposed to a handful of names.
“Getting targeted on specific themes like AI or infrastructure, which has been really supported during this kind of reshoring effort and changing supply chains, that can help power portfolios as well. So I think the name of the game is stay diversified. Don’t be too enamored with the Mag 7. Look for all the opportunities in the market.”
He adds that while AI remains the “preeminent theme today,” infrastructure is an equally important driver of long-term growth.
“If you look at kind of all the reshoring efforts to build more things like semiconductors in the United States, you need the roads, the highways, the power to be able to support all that. That’s a very different basket of stocks from artificial intelligence.”
Jacobs also points to alternative stores of value gaining traction among investors seeking portfolio insurance.
“And we also hear a lot about the debasement trade and people looking at diversifiers like gold and Bitcoin to play a unique role in a portfolio as well.”
Last week, BlackRock CIO Rick Rieder said that investors are becoming complacent amid the AI-driven surge. He warned that investor portfolios are concentrated in just a handful of names.
“We talked about in California, the idea around complacency. Complacency is high. And, you know, you look at your portfolio today, by the way, you look at Apple, you look at other names, they become larger and larger portions of your portfolio. You have to be thoughtful about that.”
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