The talk of a potential AI bubble is prevailing on Wall Street as investors await big tech earnings. Some analysts believe the promise of AI is huge when it comes to productivity gains and spending on the technology is justified. Jon Gray, Blackstone president and COO, talked about AI investments during a latest program on CNBC and said that his company’s AI investments are long term and backed by solid plans:
“We’re very focused on who our counterparty is and the length of the leases we signed. We’re not building these things speculatively. These are not condos in Miami or Dubai during a boom period. We have 15 to 20-year leases with the biggest companies in the world who have market caps of a trillion to 4 trillion dollars. So this to us seems like a very sensible way to play this very large investment theme,” Gray said.
The $9 Trillion Opportunity
Gray said that AI skeptics should think about why companies are investing heavily in the technology. He believes we are already seeing the benefits of AI and it can help us drive trillions in productivity gains.
“The AI which gets a lot of bubble talk, it’s worth thinking about why people are investing this much capital. We are beginning to see now some really powerful examples — productivity in coding, in customer engagement, on the legal side, in the content area. And if you think about what’s happening, it’s a huge investment boom in chips and data centers and power which will enable this big productivity boom. And if you think about the numbers involved, labor costs globally are $60 trillion. If this technology makes companies 15% more efficient, that’s $9 trillion of annual productivity gains. That means a lot of value created that justifies a lot of this capital spend.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Source: Pexels
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Ishares US Equity Factor Rotation Active ETF (NYSEARCA:DYNF)
Number of Hedge Funds Investors: N/A
Jay Jacobs, U.S. Head of Equity ETFs at BlackRock, recently talked about the popularity of ETFs among investors and mentioned DYNF. Here is what he said:
“If you think a few things here, first is this is a global trend. We have seen a tremendous amount of ETF flows across the iShares business globally. We had a record-breaking first half of the year, record-breaking Q3 of this year. So, this is happening globally. I think secondly, you mentioned so many of the different tickers where we’re seeing flows. There’s a tremendous amount of breadth. Well, investors are looking for a couple of things. First, they’re looking for alpha. If you’re buying an actively managed ETF, oftentimes you want to beat the benchmark. DYNF has done a tremendous job of that over the last few years. But secondly, investors are looking for tax efficiency. So one of the big advantages of an ETF, particularly versus a mutual fund, is that even in very dynamic strategies like DYNF that have a lot of turnover, it can still deliver that in a very tax-efficient way, unlikely to pay out capital gains to investors.”
9. iShares US Large Cap Premium Income Active ETF (BATS:BALI)
Number of Hedge Funds Investors: N/A
Jay Jacobs, U.S. Head of Equity ETFs at BlackRock, explained in a recent program on CNBC why investors are pouring into iShares US Large Cap Premium Income Active ETF (BATS:BALI).
“But secondly, we’re seeing a lot of flows and I would anticipate this to accelerate in growth and income strategies. Think about outcome ETFs that are delivering upside potential to the S&P 500 with a significant amount of income like our iShares US Large Cap Premium Income Active ETF (BATS:BALI). In the context of following rates, we’re seeing a lot of investors both want to participate in the markets as well as get more yield from equities”
8. iShares 0-3 Month Treasury Bond ETF (NYSEARCA:SGOV)
Number of Hedge Funds Investors: N/A
Jay Jacobs, U.S. Head of Equity ETFs at BlackRock, explained in a recent program on CNBC why he likes SGOV.
“Well, a lot of investors are looking to get yield and they’re not necessarily getting that through holding cash in a brokerage account. So, you’ve seen a lot of investors move into SGOV, our short-term government bond ETF, just to capture that yield that government bonds are paying. There’s still $7 trillion sitting on the sidelines in money market funds. And I think a lot of that could come into the ETF industry over the next several months and years as investors want to participate in continuing markets.”
7. iShares Core S&P Small-Cap ETF (NYSEARCA:IJR)
Number of Hedge Funds Investors: 22
Bill Baruch, founder and President of both Blue Line Capital and Blue Line Futures, said in a recent program on CNBC that he was investing in IJR. Here is why:
“So the SPY and the iShares Core S&P Small-Cap ETF (NYSEARCA:IJR) they sold off pretty sharply on Friday. I was really surprised to not see any follow-through to start this week response against the 50-day moving average. And then we had Fed Chair Powell on Tuesday who comes in and talks about an endgame to QT. So I think right there you saw the Russell 2000 respond. The iShares Core S&P Small-Cap ETF (NYSEARCA:IJR) is a little a little more slimmer of a of an index and so we leaned into that potentially on the week you have a breakout in in the small caps.”
6. Oklo Inc (NYSE:OKLO)
Number of Hedge Funds Investors: 36
CNBC’s Guy Adami recently commented on Oklo Inc (NYSE:OKLO) rising to new highs and reversing sharply. The analyst recommended Oklo Inc (NYSE:OKLO) investors take some profits off the table:
“New all-time high closed on the lows, one and a half to two times normal volume, having had a parabolic move to the upside. Yeah. You got to take this one and say if I’ve been longing this stock, if I’ve enjoyed this, you got to move your feet here. You have to do something. And that something is either sell half, third quarter, whatever it is, but you got to move your feet.”
5. Kimberly-Clark Corp (NASDAQ:KMB)
Number of Hedge Funds Investors: 42
Jenny Harrington, CEO and Portfolio Manager at Gilman Hill Asset Management, said in a recent program on CNBC that KMB is currently one of her favorite stocks. Here is why:
“The reason I like it is because I don’t like anything else. I don’t like cash. I don’t like bonds. I don’t like areas of the market that have done well. I don’t like stocks that are already up 25 or 50%. So, what you’ve got with Kimberly-Clark Corp (NASDAQ:KMB), which by the way, we all know what Kimberly does. They make Kleenex, Huggies, toilet paper, they make Scott’s toilet paper, and then the, you know, higher-end Cottonelle toilet paper. But the stock is down 20% over the last 52 weeks, 9% year-to-date, trades at about 16 and a half times earnings, has a 4.2% dividend yield, and come May, people are going to keep using their products. There’s just a huge amount of economic insensitivity. So, this is where I want to hide out in the fourth quarter. Oh, and by the way, even though I don’t like anything else.”
