{"id":319293,"date":"2025-12-01T22:41:16","date_gmt":"2025-12-01T22:41:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/319293\/"},"modified":"2025-12-01T22:41:16","modified_gmt":"2025-12-01T22:41:16","slug":"theres-a-once-in-a-generation-opportunity-in-these-stocks-no-matter-how-the-ai-boom-ends","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/319293\/","title":{"rendered":"There\u2019s a \u2018once-in-a-generation opportunity\u2019 in these stocks, no matter how the AI boom ends"},"content":{"rendered":"

Wall Street has overlooked a class of stocks that typically outperforms the market but is currently offering the best bargain in nearly 30 years, according to Ruchir Sharma<\/a>, chair of Rockefeller International.<\/p>\n

In a Financial Times column<\/a> on Sunday, the market veteran said investors have thrown up their hands amid the ongoing debate about whether the AI boom is a bubble about to burst, while other assets look too pricey as well.<\/p>\n

\u201cBut there is a once-in-a-generation opportunity in global markets that could deliver strong returns regardless of how AI mania plays out,\u201d he wrote. \u201cThe opportunity is in quality stocks, particularly those trading at relatively inexpensive prices.\u201d<\/p>\n

Those stocks\u2014which have high returns on equity, stable earnings growth, and low debt\u2014have historically traded at high valuations, but not right now, Sharma said.<\/p>\n

They are currently 10 percentage points behind the broader market in developed economies and trailing by 17 points in emerging economies. <\/p>\n

\u201cTypically, quality stocks have delivered their best returns after similar (but rare) periods of underperformance, which is why this moment feels so ripe,\u201d he added.<\/p>\n

While the Magnificent Seven group of stocks has emerged as a symbol of the AI boom, some of them actually fall into the quality category, such as hyperscalers Alphabet<\/a> and Microsoft<\/a>, according to Sharma.<\/p>\n

That\u2019s despite the Magnificent Seven soaring by more than 300% since late 2022, when OpenAI launched today\u2019s AI boom. Leading the charge is AI chip leader Nvidia<\/a>, which has skyrocketed more than 1,000%. It now has a market cap of more than $4 trillion, making Nvidia the most valuable stock on the market.<\/p>\n

The \u201creal sweet spot\u201d in quality stocks can be found after filtering out overvalued names, Sharma said, adding that the result is about 400 companies around the world out of the thousands that are publicly listed.<\/p>\n

They include stocks in the U.S., China, India, the U.K., and Brazil. And after screening for market caps above $10 billion, it yields companies like Lockheed Martin<\/a>, CVS Health<\/a>, Tesco<\/a>, AstraZeneca<\/a>, FirstRand, and Lenovo.<\/p>\n

This cream of the crop is trading at a 30% discount to the overall market, the widest gap since the late stages of the dotcom bubble, Sharma estimated.<\/p>\n

\u201cFrom such valuation lows, and using standard methods to estimate future returns, this quality class can be expected to deliver absolute annual returns of nearly 15% for the next three years,\u201d he predicted. \u201cThat is well ahead of expected returns for other asset classes and, perhaps most importantly, doesn\u2019t require taking a view on if and when the AI mania will end.\u201d<\/p>\n

Another big year for the S&P 500?<\/p>\n

Meanwhile, Wall Street remains upbeat on the overall stock market and expects the S&P 500 to keep putting up big gains next year<\/a>, helped by more easing from the Federal Reserve, tax cuts, and hundreds of billions in additional spending from AI giants.<\/p>\n

Market guru Ed Yardeni sees the index soaring to 7,700 in 2026, indicating a 10% increase from his year-end 2025 view of 7,000.<\/p>\n

GDP growth, consumption, and corporate profits have been chugging along, and Yardeni said the decade should avoid an economy-wide recession, while \u201crolling recessions\u201d may hit different industries at different times.<\/p>\n

Deutsche Bank<\/a>\u00a0is even more bullish and predicted the S&P 500 will finish next year at 8,000, representing a 17% jump from Friday\u2019s close.<\/p>\n

\u201cWe see equities continuing to benefit from the cross-asset inflows boom,\u201d analysts wrote in a note. \u201cWith earnings continuing to rise and companies indicating they are sticking with their capital allocation plans we expect robust buybacks to continue.\u201d<\/p>\n

Elsewhere, JPMorgan expects the S&P 500 to end 2026 at 7,500, but added that it could go to 8,000 if the Fed keeps cutting rates.<\/p>\n

Analysts cited above-trend earnings growth, the AI capital spending boom, rising shareholder payouts, and fiscal policy easing via tax cuts.<\/p>\n

\u201cMore so, the earnings benefit tied to deregulation and broadening AI-related productivity gains remain underappreciated,\u201d the bank said.<\/p>\n","protected":false},"excerpt":{"rendered":"Wall Street has overlooked a class of stocks that typically outperforms the market but is currently offering the…\n","protected":false},"author":2,"featured_media":319294,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,2512,2511,31826,61],"class_list":{"0":"post-319293","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-ca","12":"tag-canada","13":"tag-investment","14":"tag-stock","15":"tag-stock-prices","16":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/319293","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=319293"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/319293\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/319294"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=319293"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=319293"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=319293"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}