Overlooked market areas may see banners later this year.
Mike Akins, co-founder of ETF Action, encourages investors to increase their exposure to groups that underperform compared to major artificial intelligence stocks.
He told ETF Edge this week that his list includes software and cloud computing names. Many companies have fallen from “nosebleeding valuations” and have “very strong growth scenarios.”
“These companies are proving that they still need software to perform their daily operations,” Akins said.
He also cited disruptive technology as a strong buy over the next six months.
“This is a thematic strategy,” Akins points out. “It’s kind of a little further down the market in the mid-cap (and) small-cap range. Those names are kind of left out in this market.” mega cap, semiconductor-led market…. If you look at analysts’ earnings growth forecasts, these companies could do quite well. It’s just a rosy setup. ”
Akins, who was head of exchange-traded funds at ALPS before co-founding an independent financial technology and research company, emphasizes that opportunities exist for underperforming investors.Magnificent Seven” indexIt consists of Nvidia, microsoft, alphabet, Amazon, Meta, apple and tesla.
“Who would have thought Mag 7 would be flat year-to-date in the mid-market,” said Akins, who sees the group as a solid catch-up trade in the second half of the year.
‘The Magnificent Seven’ underperformed Nasdaq-100 The Nasdaq 100 is up nearly 20%, after falling more than 2% in the first half of this year.
That momentum may already be materializing. In early trading for the second half of the year, the Magnificent Seven index was up 5% and the Nasdaq 100 index was down 1% as of Friday’s close.
Additionally, Akins expects mid- and small-cap stocks to be a lucrative spot heading into 2027, noting that small-cap stocks in particular have performed incredibly well this year.
“All the downmarket names are really starting to catch up,” he said. “I think you can see that this has continued throughout the year, not just from the increased profits (and) increased revenue, but also from the expansion of multiples, which have been very depressed over the past few years.”
So far this year, Russell 2000 IndexStocks targeting small-cap stocks are up almost 20%, while broader stocks are up almost 20%. S&P500 It’s up almost 11%.
