Is the Stock Market’s Big AI Trade Over?

Plus: 2 top e-commerce stock picks, good news on inflation and obesity drug stocks. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=55630&elqTrackId=f190f564cc784c1587f26efb6d0e0420&elq=bacf4f392426436396783d514e03d48b&elqaid=55630&elqat=1&elqCampaignId=28256) [Smart Investor] Smart Investor [Tom Lauricella, chief markets editor]( Connect with Tom on [LinkedIn]( [Tom Lauricella] this week's newsletter: - [Q3 2024 Stock Market Outlook: Is the AI Stock Trade Over?]( - [2 Top E-Commerce Stock Picks]( - [May PCE Inflation as Expected, Likely Clearing Way for Sept. Fed Rate Cut]( - [Obesity Drug Stocks: Why It Will Be ‘Exceptionally Difficult’ to Dethrone Eli Lilly and Novo Nordisk]( - [Ian Bremmer: 4 Big Geopolitical Risks to Watch]( - [BofA's Savita Subramanian: It’s a Good Year for Stock-Pickers. Here’s Why]( - [Finding Small-Cap Stock Opportunities In a Big-Cap World]( We head into midyear with stocks up roughly 14% and bonds essentially flat—pretty good results at halftime. And just before the whistle blew, investors were treated to some decent news on inflation. The Federal Reserve’s preferred measure of inflation, the PCE Price Index, came in as expected, and under the hood, there were some positive signs for the outlook. We look at the data with [Morningstar’s chief US economist Preston Caldwell](. As we noted in last week’s newsletter, the fact that stocks are up 14% in 2024 is impressive, given that Fed officials are signaling just one interest rate cut in 2024—well below what markets had been expecting at the start of the year. Of course, much of that rally has come thanks to big gains in technology stocks, especially those seen as benefiting from artificial intelligence. The big question is whether these gains will continue or investors should look for a different short-term strategy. Morningstar’s chief US strategist Dave Sekera is out with his [quarterly stock market outlook](. He says the overall market is starting to look frothy, and investors might want to consider a different, less thematic approach. Meanwhile, back at Morningstar headquarters (or rather, Chicago’s famed Navy Pier), this past week we held our annual conference, featuring great speakers such as former [OpenAI executive Zack Kass]( [Pimco’s Jerome Schneider]( and [Bank of America’s Savita Subramanian](. Check out what [four big geopolitical risks Ian Bremmer]( wants investors to watch, why some fund managers think the big winners in [obesity drug stocks will keep on winning]( and where some small-cap managers [see opportunities](. Lastly, we take a deep dive into e-commerce stocks. They boomed during the pandemic and have a tougher road ahead now, but according to Morningstar’s Sean Dunlop, they’ll keep gaining market share against brick-and-mortar retailers. We have his [top two picks]( plus four other key names. That’s it for this week! As always, check out our [Markets page]( for our latest coverage, live stock market updates, and [our weekly calendar]( of key upcoming data and events. [Q3 2024 Stock Market Outlook: Is the AI Stock Trade Over?]( [Q3 2024 Stock Market Outlook: Is the AI Stock Trade Over?]( Themes that have driven the market appear to be nearing an end. David Sekera [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] Markets and the Economy [May PCE Report: PCE Inflation Index Up 2.6%, In Line With Expectations]( [May PCE Report: PCE Inflation Index Up 2.6%, In Line With Expectations]( The PCE Price Index was unchanged in May. Bella Albrecht [The Promise and Perils of Artificial Intelligence]( [The Promise and Perils of Artificial Intelligence]( AI futurist Zack Kass acknowledges that there will be rough patches ahead. Ivanna Hampton [How Investors Can Outpace the Returns of Money Market Funds]( [How Investors Can Outpace the Returns of Money Market Funds]( Pimco’s Jerome Schneider points to opportunities on the short end of the yield curve. Eric Jacobson [It’s a Good Year for Stock-Pickers. Here’s Why]( [It’s a Good Year for Stock-Pickers. Here’s Why]( Bank of America’s Savita Subramanian sees a broad swath of opportunities for stock investors. Laura Lallos [Ian Bremmer: 4 Big Geopolitical Risks to Watch]( [Ian Bremmer: 4 Big Geopolitical Risks to Watch]( Investors should keep an eye on US and European politics, along with China policies. Bella Albrecht [Obesity Drug Stocks: Why It Will Be ‘Exceptionally Difficult’ to Dethrone Eli Lilly and Novo Nordisk]( [Obesity Drug Stocks: Why It Will Be ‘Exceptionally Difficult’ to Dethrone Eli Lilly and Novo Nordisk]( The two biggest players in the market appear poised to dominate for years to come. Sarah Hansen [Finding Small-Cap Stock Opportunities In a Big-Cap World]( [Finding Small-Cap Stock Opportunities In a Big-Cap World]( Three managers offer thoughts on finding winning stocks in this out-of-favor group. Gabe Alpert [Active ETFs: A Boom, but Plenty of Busts]( [Active ETFs: A Boom, but Plenty of Busts]( MIC panelists on the key trends and differences in the growing space of active ETFs. Gabe Alpert [Active ETFs: What Investors Need to Know]( [Active ETFs: What Investors Need to Know]( These products are exploding in popularity. We tackle the benefits, drawbacks, and misconceptions surrounding this rapidly evolving space. Bryan Armour, Daniel Sotiroff, Ryan Jackson, Sarah Hansen [The 2 ETFs That Track Congressional Stock Trades]( [The 2 ETFs That Track Congressional Stock Trades]( These vehicles shed light on how Democratic and Republican members of Congress invest their money. Zachary Evens [These Active Funds Take the Lead on Aftertax Returns]( [These Active Funds Take the Lead on Aftertax Returns]( Firms like Fidelity and DFA are raising the bar for tax efficiency. Russel Kinnel [What’s Happening In the Markets This Week]( [What’s Happening In the Markets This Week]( Market closures for Independence Day, June FOMC meeting minutes, and more coming up. Leah Breakstone [In Defense of an Often-Dismissed Investing Metric]( [In Defense of an Often-Dismissed Investing Metric]( Debunking three arguments against this valuable risk-assessment tool. John Rekenthaler [3 International Stocks the Best Managers Have Been Buying]( [3 International Stocks the Best Managers Have Been Buying]( Put these global stocks on your watchlist. Susan Dziubinski [Our Top Pick for Investing in US Renewable Energy]( [Our Top Pick for Investing in US Renewable Energy]( Solar and storage shine to begin 2024, as onshore wind installations have subdued. Brett Castelli [What Does Chipotle’s Stock Split Mean for Investors?]( [What Does Chipotle’s Stock Split Mean for Investors?]( The dominant fast-casual chain’s stock carries a fair value estimate of $40 per share following its 50-for-1 split. Leah Breakstone [10 Best Value Stocks to Buy for the Long Term]( [10 Best Value Stocks to Buy for the Long Term]( The stocks of these high-quality companies look cheap today. Margaret Giles [10 Stocks the Best Fund Managers Have Been Selling]( [10 Stocks the Best Fund Managers Have Been Selling]( As the stock market rallies, top investors are taking profits in these names. Susan Dziubinski Chart of the Week [2 Top E-Commerce Stock Picks]( [2 Top E-Commerce Stock Picks]( Plus four other key names that dominate online consumer retail. Leah Breakstone [Read More]( Share: [facebook]( [twitter]( [linkedin]( Recent Earnings [Nike: Dim Sales Outlook Slams Shares, but Patient Investors Could Be Rewarded]( We expect to reduce our fair value estimate of Nike stock. David Swartz [Micron: We Raise Our DRAM Forecast and Valuation Behind Stronger Pricing Assumptions]( We’ve lifted our fair value estimate of Micron stock. William Kerwin [Airbus: We Believe Investors May Be Overreacting to Lowered Guidance and Charge]( None of the changes affect our fair value estimate of Airbus stock. Nicolas Owens [Tesla: Shareholder Vote Reduces Key Person Risk]( We continue to view Tesla stock as slightly undervalued. Seth Goldstein [Adobe’s Strong Quarterly Results Drive Share Gains]( We’re raising our fair value for the software stock, which upped its full-year outlook. Dan Romanoff [Morningstar Company Reports]( See More Get Top Stock Picks and Market Insights Every Week on The Morning Filter. Every Monday morning, Susan Dziubinski sits down with Morningstar Chief U.S. markets strategist Dave Sekera to discuss what's on his radar, new Morningstar research, and stock picks or plans for the week ahead. [Watch Now.](morningstar/streams?utm_source=eloqua&utm_medium=email&utm_campaign=newsletter_smartinvestor&utm_content=55630) Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2024 Morningstar, Inc. 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