In a recent statement, Bank of America’s Savita Subramanian pointed out that investors are currently overlooking a promising area of the market: “old school capex” stocks. This comes at a time when investors are facing what seems to be a more challenging market environment. The S & P 500 experienced its worst week since April as investors shifted their focus from big cap tech to small cap stocks in anticipation of an improving interest rate and inflation outlook.
Picking Positions Carefully
While Subramanian believes that stocks still have the potential to increase in value, she also warns that investors need to be cautious in their decision-making, especially in the near term. She predicts a more volatile market for tech stocks and emphasizes the importance of selecting positions carefully. Despite remaining optimistic about the market’s overall direction, Subramanian expresses some reservations about the current state of the index level.
Rather than betting on big cap tech companies, Subramanian advocates for investing in “old school capex” stocks that have not yet priced in potential gains from artificial intelligence and the nearshoring trend. She argues that there may be more upside potential in these overlooked sectors of the market. Subramanian highlights the upcoming infrastructure spending cycle as a key driver of growth for companies in the industrials, materials, and energy sectors.
According to Subramanian, companies in the industrials, materials, and energy sectors are poised to benefit from the increased infrastructure spending needed to support and power AI chips. She expects these sectors to experience stronger gains and increased investment, especially when compared to AI and megacap tech companies. Subramanian believes that these traditional “old school capex” plays are not yet reflecting the positive news surrounding AI technology and infrastructure development.
Savita Subramanian’s insights shed light on a potentially overlooked opportunity for investors in the form of old school capex stocks. By shifting focus towards these sectors, investors may be able to capitalize on the expected growth in infrastructure spending and the increasing importance of AI technology. It is clear that a strategic approach to investment, focusing on sectors with untapped potential, could lead to significant gains in the current market landscape.