"A stark contrast": Wall Street weighs winners and losers amid AI-driven tech sell-off

Investors rotated retired of tech stocks successful February, with the Nasdaq Composite (^IXIC) sinking much than 4% successful the past period arsenic concerns implicit however AI could disrupt well-established industries rocked markets.

But Wall Street strategists spot cardinal distinctions among definite names successful tech successful the adjacent term.

"There was specified a stark opposition betwixt the net from Nvidia (NVDA), which we bash own, and Salesforce (CRM), which we don't own,” Nancy Tengler, CEO of Laffer Tengler Investments, told Yahoo Finance.

The strategist sees the astir 5% pullback successful Nvidia's stock terms pursuing the chipmaker's quarterly net connected Wednesday — on with the stock's sideways show truthful acold this twelvemonth — arsenic a buying opportunity.

She argues Nvidia looks inexpensive fixed the astir $650 cardinal that hyperscalers specified arsenic Microsoft (MSFT), Meta (META), Amazon (AMZN), and Alphabet (GOOGL, GOOG) are expected to walk this twelvemonth connected information centers that tally AI workloads connected the chipmaker's hardware.

"What we've heard from each the hyperscalers is that they conscionable don't person capable [computing] capacity, and that is however you make revenues," Tengler said. "One man's capex is different man's gross source, and that's Nvidia."

On the different hand, Tengler said her steadfast utilized to ain Salesforce banal but exited the presumption immoderate clip ago.

"We conscionable didn’t spot the maturation trajectory," Tengler said of Salesforce shares. "We thought determination were amended places to be."

Read more: How to support your portfolio from an AI bubble

Investors person precocious questioned whether software-as-a-service (SaaS) firms' customers could make in-house solutions utilizing AI tools from ample connection exemplary providers similar Anthropic's (ANTH.PVT) Claude Code, reducing their reliance connected providers similar Salesforce.

Additionally, if AI increases productivity and reduces the fig of employees needed to bash work, it could interaction software's accepted pricing models, specified arsenic "seat" oregon headcount-based pricing.

"When you're selling bundle by seats, you're tied to the occupation market, ultimately. So we wanted to beryllium successful different places," Tengler said.

Goldman Sachs economists person projected a emergence successful unemployment this twelvemonth from 4.3% to 4.5%, noting upside risks from faster adoption and larger displacement.

"If the fig of seats are yet going to shrink successful the adjacent mates of years, that raises concerns," said Melissa Otto, caput of disposable alpha probe astatine S&P Global.