The Magnificent Seven’s tech stocks account for about 27% of the S&P 500 (^GSPC) market capitalization, and the tech industry remains one of Wall Street’s most powerful sectors. AI was at the center of the discussion for these companies, with plans to increase investment in AI to incorporate into their products and business models.
Hennion & Walsh CIO Kevin Mahn joins Yahoo Finance to discuss why he advises investors to consider tech stocks heading into 2024 and why cybersecurity stocks are just as important when considering them Let’s talk about why.
“I think what has been lost in the AI race is the importance of cybersecurity. I always refer to cybersecurity as the glue that holds the technology puzzle together,” Maan said. “In fact, many argue that the proliferation of AI could actually increase the number and effectiveness of cyber-attacks around the world. Therefore, to counter AI-generated cyber-attacks, We’re going to need more AI.”
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video transcript
– So, Kevin, when you think about the opportunities that may emerge, especially how you’re preparing for 2024, especially as you prepare for the expectation of rate cuts, where do you invest new customer funds?
Kevin Mann: Great question, Diane. It comes down to what the client’s objectives are, what their risk tolerance is, and what their investment framework is. If their goal is income, there is no doubt that they will find great opportunities on the fixed income side of the current market, in areas such as municipal bonds and preferred securities. Many of our listeners may be surprised to learn that preferred securities have historically been the best-performing bond class following the end of a rate hike cycle, with an average annual return of just over 14% in the year following the end of a rate hike cycle. I don’t know. Hiking cycle, I think we’re in that right now.
When it comes to stocks, if you’re looking for growth opportunities, there certainly seems to be a lot of potential in the information technology sector. And I don’t deny the opportunities that exist in the transformative nature of generative artificial intelligence and AI. But I think what has been lost in the AI race is the importance of cybersecurity. Cybersecurity is what I always refer to as the glue that holds the technology puzzle together. In fact, many argue that the prevalence of AI could actually increase the number and effectiveness of cyber-attacks around the world.
Therefore, more AI will be needed to counter AI-generated cyberattacks. Therefore, we see an opportunity in the cybersecurity field. His three current holdings within SmartTrust’s Technology Revolution Trust include CrowdStrike, Cyber Ark, and Fortinet.
– Kevin, we’ll discuss this here. On the same subject of AI, would you advise people to keep putting capital into companies like NVIDIA and Microsoft that are the faces of this boom in AI interest?
Kevin Mann: Yeah. I certainly believe that Microsoft will be the ultimate winner of the AI race, but he will not be the only winner. NVIDIA is a critical component for the entire AI ecosystem, and from the current situation it will continue to grow in the next 5-10 years. However, you need to consider valuation and attractive entry points.
So, are these areas worth investing in? It is certainly so. However, I believe there are even more attractive opportunities within the AI ecosystem at more attractive valuations. There are opportunities, especially if you look at the proliferation of parts of data centers, parts of chips, semiconductors, the actual technology itself, but investors should do their due diligence and not just invest in a few products. It would be wise to do so. Josh, one of the leading well-known names.
– Okay. Kevin Mahn, thank you for the great insights across the board, including whether we’re talking about NVIDIA or Microsoft, where the Fed will land, and when they’ll declare victory. Thank you so much, Kevin.
Kevin Mann: you’re welcome. I hope you have a nice vacation.