Overlooked market areas may see banners later this year.
Mike Akins, co-founder of ETF Action, encourages investors to increase their exposure to groups that underperform compared to major artificial intelligence stocks.
He told ETF Edge this week that his list includes software and cloud computing names. Many companies have fallen from “nosebleeding valuations” and have “very strong growth scenarios.”
“These companies are proving that they still need software to perform their daily operations,” Akins said.
He also cited disruptive technology as a strong buy over the next six months.
“This is a thematic strategy,” Akins points out. “It will probably unfold a little further down to the mid-term of the market.” [and] Small cap range. These names have been left out in a way in this huge semiconductor-driven market… If you look at analysts’ earnings growth forecasts, these companies could do quite well. It’s just a rosy setup. ”
Akins, who was head of exchange-traded funds at ALPS before co-founding an independent financial technology and research firm, also highlights opportunities among the weaker stocks in the Magnificent Seven index, which includes Nvidia, Microsoft, Alphabet, Amazon, Meta, Apple and Tesla.
“Who [would have] “We thought Mag 7 would be flat year-to-date in the mid-market,” said Akins, who believes the group is a healthy catch-up trade heading into the second half of the year.
The Magnificent Seven underperformed the Nasdaq 100 in the first half of this year, falling more than 2% while the Nasdaq 100 rose nearly 20%.
That momentum may already be materializing. In early trading for the second half of the year, the Magnificent Seven index was up 5% and the Nasdaq 100 index was down 1% as of Friday’s close.
Additionally, Akins expects mid- and small-cap stocks to be a lucrative spot heading into 2027, noting that small-cap stocks in particular have performed incredibly well this year.
“All the downmarket names are really starting to catch up,” he said. “I think you can see that not only has our revenue increased, but it has continued throughout the year. [and] This is not only due to the increase in revenue, but also due to the expansion of the multiple. [have been] The past few years have been extremely depressed. ”
So far this year, the Russell 2000 index, which tracks small-cap stocks, is up about 20%, while the broader S&P 500 index is up about 11%.
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