RerF Trading at around $163 at the time of writing, the shares of the Fidelity MSCI Information Technology Index ETF ( NYSEARCA: FTEC ) have appreciated by 32.73% over the last year as charted below. This has been largely possible because its top holdings have benefited from the AI enthusiasm, but, after such a performance, it becomes important to assess whether the momentum can continue.
Data by YCharts Also, things have changed recently after Salesforce ( CRM ) which had invested in artificial intelligence reported dismal earnings and was punished hard by the market, with volatility also engulfing other software stocks at that time. In consequence, this thesis aims to show that it is now time to exercise caution based on emerging risks as Gen AI starts to disrupt the enterprise software industry with related stocks constituting a substantial part of FTEC's overall weight. First, I show that despite valuations having become expensive for AI stocks, there are still opportunities.
AI has become Expensive Nvidia ( NVDA ) has delivered a spectacular one-year performance of 222% after emerging as the dominant manufacturer of parallel computing chips for key players in the artificial intelligence space like OpenAI. In its wake, other stocks like Advanced Micro Devices ( AMD ) and Broadcom ( AVGO ) have also profited with gains of 42% and 77% respectively. The first has positioned itself as an alternative player in the accelerator GPU space trying to win market share from Nvidia an.
