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Earnings estimates for AI-related companies are on the decline, prompting a shift towards value and cyclical stocks. The Virtus Artificial Intelligence & Technology Opportunities Fund (AIO) has been downgraded from buy to hold due to bearish seasonal trends and stretched valuations. AIO's portfolio is heavily weighted towards growth stocks, which raises concerns about liquidity metrics amidst falling earnings expectations.
The article emphasizes the importance of monitoring key price levels, particularly ahead of NVIDIA's upcoming quarterly earnings report. With a total return of 30% for AIO, the cautious stance reflects the uncertainty in the AI sector as earnings growth trends for AI-adjacent companies are softening. Investors are advised to consider the implications of these trends on their investment strategies.
• Earnings estimates for AI companies are declining, impacting investment strategies.
• AIO downgraded from buy to hold due to stretched valuations and seasonal trends.
The article discusses declining EPS estimates for AI-related companies, signaling potential challenges in the sector.
The article highlights that AIO's valuation is stretched, which raises concerns for investors.
The article notes uncertainty in AIO's liquidity metrics due to its focus on growth stocks.
The fund's recent downgrade reflects concerns over its growth-focused portfolio amidst declining earnings expectations.
The upcoming quarterly earnings report from NVIDIA is highlighted as a key event for assessing the AI sector's performance.
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