Pullback is just a 'healthy consolidation,' use it to buy AI plays, says BlackRock's Kate Moore

Published Tue, Apr 16 202411:33 AM EDTUpdated Tue, Apr 16 202411:52 AM EDT

Recent weakness in the market shouldn't deter investors from finding pockets of opportunity, particularly in artificial intelligence-related companies, according to BlackRock's Kate Moore. Stocks are in the red to start the new quarter — the S & P 500 is down almost 4% this month — amid worries that interest rates will stay higher for longer and conflict in the Middle East may escalate. The Dow Jones Industrial Average and S & P 500 fell for a second week last week. There's also been a pullback in the " Magnificent Seven " stocks, as well as in semiconductor makers such as Advanced Micro Devices that helped power the AI-fueled rally since late October. But the latest dip isn't a sign of a lackluster market, according to Moore, who is the head of thematic strategy for BlackRock's global allocation investment team. "I think healthy consolidation after an extremely strong return in the first quarter is completely fair, and doesn't change the fundamentals," Moore said in an interview. A "supportive" macroeconomic climate "should underpin stronger stock returns over the balance of the year. There's a considerable amount of upside to go. That said, it's not going to be a straight line," she added. Moore sees an opportunity in two of BlackRock's highest-conviction themes: AI-adjacent software and semiconductor companies, and global commodity producers and miners, particularly those related to copper. "We are very constructive on the continued demand for AI and AI-related technologies. I see a lot of upside in the software companies, and I think we're at the very beginning stages of the semi-cycle," Moore said. "After a significant lack of investor attention for the last number of quarters, I think it makes sense to take a good look at companies that produce materials that are necessary for the energy transition, that are necessary for AI and technology advancements and are trading at ... very attractive valuations," she added. As first-quarter earnings reports roll in, Moore believes a "solid" corporate profit is in store, expecting companies to affirm and raise their guidance as they focus on cost-cutting efforts and bottom-line earnings growth, particularly as consumer spending proves resilient and inflation cools. She expects better breadth in terms of earnings growth this quarter, which should support long-term investor confidence in the equity market.