Vanguard Is "Cautious" on U.S. Growth Stocks. These 2 Value ETFs Could Be Smarter Buys for Long-Term Investors.
In the next 10 years, underrated sectors and undervalued companies might beat the biggest names of the AI trade.
Overview
Is the artificial intelligence (AI) boom too good to last? Investors have recently questioned the high valuations of AI hyperscaler stocks. There has been turbulence in semiconductor stocks. Even if AI technology turns out to be transformative for the overall economy, there is concern among investors about whether the companies building AI tools are paying too much for uncertain return on investment.
A market outlook from Vanguard published on July 22 shows the investment firm optimistic about some U.S. stocks -- but less so about U.S. growth stocks. The outlook stated that Vanguard is "constructive on the shorter-term outlook for equities as the AI investment cycle deepens" but that Vanguard's "medium-term outlook is more cautious." The Vanguard outlook described U.S. growth stock valuations as "already stretched" and said that "we continue to prefer U.S. value stocks" for longer time horizons.
Details
Vanguard's 10-year markets forecast also says that U.S. value stocks are expected to strongly outperform U.S. growth stocks. The company's research expects U.S. value stocks to deliver average annual returns of 6.4% to 8.4%, while U.S. growth stocks are expected to deliver only 3.6% to 5.6%.
Source
Originally published at www.fool.com.