The AI trade continues to gain momentum, prompting investors to explore opportunities beyond Nvidia (NVDA). However, identifying promising stocks has proven challenging. Citi head of equity trading strategy Stuart Kaiser joins Catalysts to share his insights on the AI trade.

Kaiser describes Nvidia's position in the AI trade as an "easy match," noting that some investors purchase this name to "buy the stocks that are like the pipes of the [AI] system." Despite Nvidia experiencing a significant sell-off as investors sought to diversify their portfolios, Kaiser observes, "People said, you know what, let me just go back to the clean and easy AI trade and not try to get cute with these other things."

Addressing concerns about tech concentration in markets, Kaiser explains, "This is kind of how equity markets behave. Over any 12-month period, you're gonna have forty to fifty percent of returns come from just ten stocks." He further elaborates on market dynamics, stating, "There's a theme, a trend, a shift going on in the markets that tend to favor these winners. Momentum does well in those stocks."

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This post was written by Angel Smith