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For every mega AI deal that has rolled through, lifting investor hopes that the AI transition is here to stay, there’s a revival of jitters — whether it’s chatter of an asset bubble, impatience for AI-fueled returns, or fears of ill-considered investments.
A robust earnings season has helped calm those worries, even as economic warning signs have started to pile up. Some observers have pointed to a broadening rally and the prospects of other sectors playing catch-up to the tech giants as reasons for optimism not directly tied to the fate of the AI trade.
Other analysts see an opportunity to zig while Wall Street zags. After all, it’s a big market out there.
What if the market has been so focused on the growth of the AI industry and its offshoots — from chips to power plants — that investors are missing out on other opportunities? That’s a question posed by a team of analysts at Bank of America this week, who also set out to identify companies that may be overlooked but don’t trade like they are directly exposed to AI excitement.
Of the 16 names shortlisted by the analysts, which are Buy-rated, have below-market valuations, and are off their highs by 10% or more, several stood out for exemplifying key themes in the economy and the stock market. To be clear, these are not our stock picks. But BofA’s exercise is an interesting one that helps to tell the story of the complete economy.
Viking (VIK) is the first of three we’ll highlight here.
In the hospitality world, premium is the word of the day. From travel-focused credit cards to hotel lines, the play for the most affluent customers — the top of the K-shaped economy — is defining success for the industry’s top brands.
The analysts chose to highlight the premium cruise line because “its differentiated, all-inclusive, destination focused product continues to set it apart from peers, driving superior financial performance.” Viking boasts superior margins and growth compared to its more modestly priced competitors, they wrote, and the operator commands more than 50% market share in the river cruise category.
McCormick (MKC), the food company, is the next stock worth noting because of its potential for a tariff bounce-back. McCormick sources ingredients from over 85 countries, the analysts wrote, and the president’s sweeping tariffs have in part pressured the stock.
Since most of McCormick’s top spices cannot be sourced inside the US, the company may win an exemption from the tariffs that an industry group is advocating for. The seasoning maker also stands to gain if the Supreme Court rules that the tariffs are unconstitutional. What’s more, McCormick is among the few packaged food companies showing organic sales and volume growth as firms struggle to keep up with shifting consumer tastes. (Flavor wins, folks.)
Finally, Dollar General (DG), a stock that is winning out as consumers trade down. Middle- and high-income earners are frequenting discount stores, looking for more affordable options as inflation continues to pressure the American consumer. Dollar General’s core customers, the analysts note, are checking out with even bigger shopping carts, seeking cheaper goods and smaller pack sizes. The discount chain is also enjoying e-commerce success through same-day delivery service.
You won’t find jaw-dropping investments here, but that’s the point. The biggest beneficiaries of the AI trade may be obscuring opportunities elsewhere.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.
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