Forget AI Stocks: This Tech Play Is the Real Winner
Netflix stock is trading at a multiyear low.
Overview
If you are like many investors, your portfolio has probably become top heavy with artificial intelligence (AI) stocks. And, honestly, it is very easy to see why, considering how incredibly fertile the AI sector has been.
But after four years of meteoric gains, some AI stocks might be overvalued and more prone to fall should the market head south. Check the valuation metrics for some of your AI stocks, like price-to-earnings (P/E), price-to-book (P/B), free cash flow, P/E-to-growth (PEG), and price-to-sales (P/S), among others, to see if they are elevated beyond normal historical ranges. If they are, you should do some additional research to see if they are vulnerable.
Details
If your portfolio is AI heavy, it's best to look for other opportunities to provide balance. This might include defensive stocks, value plays, dividend stocks, and bonds. You can also add some alpha with some reasonably valued growth stocks outside of the AI universe.
Source
Originally published at www.fool.com.