A one-day rotation alone would not make me abandon the AI theme. The weak payrolls report strengthens the case for lower rates over time, but it does not change the structural drivers behind AI infrastructure demand.
My preference would be a barbell approach:
Keep core positions in high-quality AI leaders with durable earnings and pricing power.
Gradually add exposure to value sectors such as industrials, healthcare and financials that can benefit from a broader market rotation.
If this becomes a multi-week trend with sustained earnings downgrades for AI capex beneficiaries, I would trim weaker, highly valued hardware names first rather than exit the theme wholesale. Conversely, if AI demand and corporate spending remain robust through earnings season, the recent sell-off could prove to be another reset rather than the end of the cycle. The key question is whether fundamentals weaken, not whether sentiment changes for a few trading sessions.
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