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Yet, despite the pullback, enthusiasm surrounding AI remains intact. The question for investors now is not whether the theme still has legs, but which companies are best positioned to benefit from it.
One investor whose actions may provide some clues is billionaire hedge fund manager Rob Citrone.
Citrone built his reputation through Discovery Capital, the hedge fund he launched in 1999 with $5 million of his own capital. Over time, the fund has outperformed the S&P 500 by roughly 4 percentage points annually on a net basis. As a result, an investment made at launch would have grown to nearly 20 times its original value, compared with about six times for the benchmark index.
Given that track record, investors tend to pay attention when Citrone shares his views. Discussing equity valuations recently, he said: “I think you have a bifurcated market where you have some of the AI names just really being strong. And that makes sense in certain sectors. We’re very bullish on the memory sector, for instance.”
