Investors looking to profit from this volatile market should be selective about their spots in the artificial intelligence space, while also adding exposure to names that are less likely to be disrupted by new technology, according to investor Dan Niles. “We want to have a mix of stocks that have a lot of assets (and) be well diversified,” the founder of Niles Investment Management told CNBC’s “Squawk on the Street” Monday in an interview. “I think AI trading is still a good space with OpenClaw coming out and token demand is reaching a new inflection point,” he added. “That’s why we want to see a lot of ‘HALO’ names alongside AI names.” HALO refers to “high asset, low obsolescence” stocks that are considered less vulnerable to AI disruption. Niles also said the overall stock market is oversold. Therefore, now is a good time to consider using cash. The S&P 500 posted its fourth consecutive week of declines on Friday as the war between the United States and Iran continues. But stocks rose on Monday after President Donald Trump said the two countries had “productive” talks over the weekend. On the AI front, Niles recommends investors have exposure to stocks that are likely to benefit from “a significant increase in agentic AI.” Niles said Alphabet is one of the companies poised to gain momentum in the AI industry this year, pointing to the company’s strong resources and technology stack. Indeed, the stock has fallen more than 3% this year as AI trading appears to be losing momentum. But “as more people start adopting things that actually work, I think eventually we’ll see these AI trading, at least my favorite trading, start to pick up again,” Niles said. GOOGL YTD Mountain GOOGL YTD YTD HALO Regarding his exposure, Niles said he likes stocks in the utilities, materials, energy, consumer staples and industrial sectors. “Not everyone can win” in the field of AI, Niles said. “When you go through this, you have to be very selective, and that includes owning some of the names that are in the high-asset, low-obsolescence category.” And while software stocks may be going up like the rest of the market, Niles said it’s best to stay away from these names. “In the long run, we’re going to see a lot of software companies completely disappear, especially if those companies don’t own the underlying data,” Niles said. “We have to see who wins.”
