"Indeed, valuations on various AI stocks have been getting frothy. And while there may be no AI bubble on the verge of bursting, one has to think that a market correction would likely see the tech sector take on amplified damage. The fastest gainers tend to be the quickest to fall when market momentum flies south and investors begin taking profits or panicking en masse."
"The energy sector has delivered solid, steady gains in recent years, with the popular Energy Select Sector SPDR Fund ( NYSEARCA:XLE) and Vanguard Energy Index Fund ETF ( NYSEARCA:VDE) climbing 17.55% and 18.80%, respectively, over the past two years. While these returns trail the S&P 500 's impressive 41.7% gain over the same period, the sector has offered much lower volatility, making it an appealing defensive play in an increasingly unpredictable market."
AI stock valuations have become frothy and vulnerable to sharp reversals during market corrections. The fastest gainers in technology can experience amplified declines when momentum reverses and investors take profits or panic. The energy sector has produced steady, lower-volatility returns recently, with XLE and VDE climbing 17.55% and 18.80% respectively over the past two years versus the S&P 500's 41.7% gain. Lower volatility makes energy ETFs attractive as defensive, contrarian positions. Regulatory tailwinds and increased drilling permits under the current administration could further support energy fundamentals. Energy names may continue reliable performance or even gain amid market volatility.
Read at 24/7 Wall St.
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