"And while the popping of the AI bubble hasn't yet happened, it does seem like much of the damage done to particular overheated AI stocks has been a bit overdone. Of course, it's hard to tell how the trade will fare as we go into another year, especially as valuations begin to come back to earth and firms shift gears, look to monetize after another year of big spending."
"At this juncture, it'll probably take more than a few circular deals and agent announcements to bring the heat back to AI stocks. For growth investors ready to bail and pursue other opportunities, there are several intriguing places to look. While the AI (and AI quantum) themes are likely to be the hottest topics for 2026, there might be lower-risk growth corners that could be worth diversifying into."
AI stock valuations have recently retraced, with some declines appearing overdone for certain overheated names. Market sentiment toward AI remains doubtful and may stay subdued as excitement cools and firms shift toward monetization after heavy spending. A sustained recovery likely requires demonstrable returns rather than promotional announcements. Growth investors seeking alternatives can consider lower-risk growth areas for diversification. Biotech offers defensive growth opportunities across GLP-1 therapies, next-generation treatments, and vaccines. Individual biotech stocks remain speculative due to clinical risk, but diversified thematic ETFs like the iShares Biotechnology ETF (NASDAQ:IBB) provide broad exposure and lower single-name risk.
Read at 24/7 Wall St.
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