A top market strategist at the banking giant Morgan Stanley believes that the AI trade is cooling, but the money is not leaving the market.
In a new RiskReversal Media interview, Mike Wilson, chief US equity strategist and CIO at Morgan Stanley, believes that the AI trade is in the midst of a correction as investors cash out their gains to look for other areas in the market.
“I think it’s going to be, once again, it’s going to be one of these rolling corrections, and the money will find other outlets. And look, for all those stocks you mentioned that are starting to roll over, there are other ones that are absorbing the capital.”
Wilson points to financials as an early beneficiary of that shift, noting the sector’s strength over the past year. He also sees two other sectors that could rally amid the capital rotation.
“The financials have been unbelievable for the last six months… They’re just sucking up that opportunity. We think consumer goods is going to be an area. Healthcare is a group we upgraded four or five months ago. It’s getting traction with biotech specifically.”
According to Wilson, he sees capital rotating away from what worked and toward what has not yet been fully priced in.
“So, I mean, in other words, the money is not leaving the market, finding a different place. It’s just saying, okay, ‘That’s it. is over for now. Let’s go over here.'”
Data shows that the Roundhill Magnificent Seven ETF (MAGS), designed to provide pure-play, equal-weighted exposure to all Mag 7 stocks in a single position, has been consolidating since hitting its all-time high of $69 in October 2025. At time of publishing, MAGS is valued at $66.
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