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Artificial intelligence first spurred massive gains to record levels in the stock market. Now, AI is taking out equities, one sector at a time. First, it was software getting pressure. The iShares Expanded Tech-Software ETF (IGV) has fallen nearly 16% in the past month on fears AI will curb demand for software services. Financials got wracked last week as well after tech platform Altruist unveiled a new tax planning tool powered by AI. The State Street Financial Select Sector SPDR ETF (XLF) dropped 4.8% last week, marking its worst weekly performance since April. Then office real estate stocks got crushed Thursday on concern AI will lead to a rise in unemployment , thus decreasing demand for commercial real estate. Lastly, trucking and logistics names fell as investors believed AI could curb freight inefficiencies — thus lowering demand for the industry. “[Last] week felt like a game of whac-a-mole,” wrote Tony Pasquariello, global head of hedge fund coverage at Goldman Sachs. “The big question is, while the market separates ‘rent-seekers’ from companies with strong moats, where does one hide?” Luckily, there are some stocks investors can turn to and weather the AI storm. JPMorgan compiled a list of “mispriced” stocks that are most insulated from AI disruption. Buy-now-pay-later giant Affirm made the list. The stock, which JPMorgan rates as overweight, has plunged more than 17% this month. But fundamentally, “business performance is as strong as ever, as the company continues to post premium [gross merchandise value] growth ( > 25%) and stable credit performance, and GAAP operating profit margins are expanding (albeit off a low base),” wrote analyst Reginald Smith. Another name that made the cut is Carvana . Despite being down more than 14% in February, analyst Rajat Gupta thinks “CVNA’s vertically integrated infrastructure and moat at [the] end-of-line for AI disruption.” Other stocks on JPMorgan’s list include Roku , Spotify Technology and CrowdStrike .
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