AI Frenzy Drives Bubble Risks; Better to Seek Indirect AI Winners Than Chase Overvalued Hype Stocks

AI stocks like NVDA are surging as investors rush to invest in "generative AI" and related technologies. This has led to inflated valuations and bubble risks.

It's better to invest in the users and facilitators of AI rather than the direct developers. Look for ways AI can improve your existing investments.

Trying to time AI investments and pick winners is difficult. Buying at the height of a bubble can lead to poor returns even if you pick a winning company.

Our approach is to remain disciplined value investors, not chase trends. We look for high-yield stocks that can utilize AI to boost revenues and profits.

One example is Virtu Financial (VIRT), which provides AI analytics products to improve trading, among other fintech services. VIRT benefits from AI demand without being a pure-play.