CIO Warns AI Trade 'Technically Unsustainable,' Recommends Two Sectors

Peter Boockvar, Chief Investment Officer at One Point BFG Wealth Partners, told CNBC on June 10 that the technical setup under the AI trade has become unsustainable. He noted that AI-related stocks have risen so far above their moving averages that such chart patterns are typically unsustainable.

The Warning

Boockvar stated: "Stocks in the AI trade got so far above their moving averages that you just knew that usually chart patterns like that are unsustainable." He advised against chasing these stocks at current levels.

Recommended Sectors

Instead, Boockvar recommended focusing on two sectors:

• Energy: Still strong demand and reasonable valuations.
• Healthcare: Solid fundamentals and attractive valuations.

Broader Context

The warning comes amid significant gains in AI-related tech stocks like Alphabet (GOOGL) and Broadcom (AVGO) year-to-date. However, some analysts caution that valuations have become stretched.

What It Means for Investors

Investors should exercise caution and avoid chasing AI stocks at current levels. Diversifying into energy and healthcare may be a more prudent strategy.