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00:00 Josh
While AI remains a big story for markets, it is no longer the main driver of the market rally. Today we’re seeing Nvidia and Oracle fall while broader markets surge.
00:09 Josh
Our next guest joins with some ideas to diversify outside of the AI theme. We have Gargi Chaudhuri, BlackRock Chief Investment and Portfolio strategist for the Americas.
00:15 Josh
Gargi, it is good to see you. So, looking ahead to 2026, uh Gargi, big picture you say 2026 could have strong growth.
00:23 Josh
Uh, you’re looking for easier Fed policy. You talk about accelerating productivity. That sounds pretty good.
00:30 Josh
You don’t say buy everything here. You don’t say time to just back up the truck. You advise clients selective risk taking for 2026.
00:39 Josh
Start there, uh Gargi. What does that actually mean for investors? How do you define that?
00:44 Gargi
Good afternoon, Josh. It’s great to be on with you and Julie. Um so to your point, we just published our year ahead outlook in uh January and one of the themes that we talked a lot about
00:54 Gargi
is just this idea of continued dispersion, but us remaining risk on within uh within the uh framework of continued dispersion in equity markets. So, what do I mean by that?
01:05 Gargi
First of all, AI is no longer the only game in town. It’s certainly one of our favored expressions, but we think that within AI, it’s not going to be a monolith anymore.
01:14 Gargi
So really active management with AI, and even the dispersions that you were talking just about earlier with respect to just semis versus software, for example. I think we’re going to see more of that dispersion and disruption.
01:25 Gargi
So that’s number one. But also recognizing that there’s opportunities outside of the AI theme, and we’re already seeing that broadening come through, not just in returns, but also in earnings growth.
01:34 Gargi
So expect to see that continue to take place. Uh, value is where we think investors should be allocating.
01:41 Gargi
And then lastly, don’t forget to add the diversifiers in your portfolio. So certainly a room for bonds, certainly a room for other commodities, which I know has had a fair amount of volatility in January, but that all plays a role in a portfolio.
01:51 Josh
You mentioned AI, Gargi, and and listen, we’re going to have pound here reporting results here any minute. Uh clearly, you know, an AI winner. Um, the trillions, you know, being spent on AI infrastructure.
02:00 Josh
I’m sure Gargi, you know, you go out with clients, investors, they ask you, ‘Okay, when is that going to broadly turn into to profits?’ What do you tell them?
02:06 Gargi
And and you know, that is a question that’s coming up a lot from clients, what they’re looking and what the market is actually rewarding is that profitability.
02:16 Gargi
So, more and more, CAPEX by itself is not is not necessarily rewarded as much as revenues are. We saw that in the few names that have reported earlier uh last week.
02:26 Gargi
And I think we’re going to continue to see that in this earnings season that you need to actually be able to monetize. Having the ability to do CAPEX isn’t enough.
02:35 Gargi
And one thing that the clients that we talk to are actually voting on and actually allocating to is uh the diversification within the AI theme. And what I mean by that is obviously you’ve got sort of, uh, you know, the semi and the uh software names that are dispersing,
02:46 Gargi
but there’s also the flow into EM, which is massive, and that is an AI story we think that clients are waking up to and allocating massively to huge amount of flows into IEMG,
02:57 Gargi
which of course is our Ishare’s EM ticker, as well as names like South Korea and Taiwan, which are receiving a lot of inflows. So clients want AI, but they also want AI in different forms that’s outside of just the US.