Monica Desenser on AI Supercycle and Market Breadth (with Jonathan Ferro, Lisa Abramowitz, Amarie Hordern)

Monica Desenser advises staying invested in the AI supercycle but being selective. She sees value in both public and private markets, notes earnings and margins expanding beyond tech, and highlights financials and healthcare as sectors that could benefit from AI. She warns portfolios may not be built for higher and more volatile inflation.

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Monica Desenser on AI Supercycle and Market Breadth (with Jonathan Ferro, Lisa Abramowitz, Amarie Hordern)

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Desenser sees AI driving earnings and margins but advises being selective and taking some off the table from tech names to rebalance, implying cautious optimism.

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She notes broadening out beyond tech with margin expansion in most sectors, which benefits small-cap Russell 2000. She highlights financials and healthcare as sectors that could benefit.

Jonathan Ferro

Alphabet is raising $80B in equity capital. Monica Desenser says stay invested in the AI supercycle but be selective.
Monica Desenser

There are opportunities in both private and public markets. Alphabet has run over 100% in the last year and still holds well, with significant free cash flow generation.
Jonathan Ferro

Where is the value in the equity market?
Monica Desenser

Earnings have significantly outpaced expectations. Revenues are accelerating, margins are expanding, and it's not just tech—breadth is improving across most sectors. 20x valuations may not be outlandish.
Lisa Abramowitz

What is driving the broadening out if not cheaper commodity prices or disinflation?
Monica Desenser

AI investments are starting to show benefits, though hard to quantify. Companies raised prices and never took them back down, and moderation in inflation helps margins.
Lisa Abramowitz

How difficult is it to remain nimble with such uncertainty around the AI thesis?
Monica Desenser

It's very difficult, which is why there's concentration in tech names. Clients are asking where else to invest. Financials could benefit from AI and rates hanging in. Healthcare could see more innovation from AI.
Amarie Hordern

Is the upside underappreciated on the margins of other sectors benefiting from AI?
Monica Desenser

It's hard to predict 3-4 years out with DCF models. People go to obvious places, but money is starting to shift to other areas. The challenge is identifying the next 2-3 sectors to benefit.
Amarie Hordern

Are clients more concerned about AI or the Middle East conflict? Is your portfolio built for higher and more volatile inflation?
Monica Desenser

Portfolios do not reflect fear about higher rates and inflation. After this equity rally, investors should consider rebalancing and adding sectors like core real estate and infrastructure that benefit from sticky inflation.

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