On November 6th, according to the Financial News Agency (edited by Liu Rui), at the beginning of November, the U.S. stock market encountered a "bad start". On Tuesday in the East Coast time, the leading AI stock Palantir fell by 8%, leading many othe

Although the U.S. tech stocks saw a significant recovery on Wednesday EST, market concerns over the high valuation of AI concepts have not fully dissipated. In this context, Wells Fargo advised investors to proceed with caution and carefully select q

We do not advocate chasing rising prices or selling in a weak market, wrote Paul Christopher, head of global investment strategy at Wells Fargo in a report, along with his investment recommendations.

Avoid Overvalued Tech Stocks

Wells Fargo pointed out that investors should first avoid communication service stocks and information technology stocks.

Christopher noted that during the AI boom, the valuation of these two types of stocks has already been quite high. As the valuation of other market sectors becomes more attractive, the bank has lowered its rating on these sectors accordingly.

We have always believed that the trend of the technology sector may sometimes develop too rapidly and excessively, so we have been paying attention to the valuation of this sector, he wrote.

Over the past few months, people have questioned whether the valuation of some technology companies is too high, and whether the companies can fulfill their AI promises to investors. For example, Palantir is expected to have a PE ratio of around 217x

Instead, Christopher suggests investors purchase utility, industrial and financial stocks in U.S. markets as well as emerging market stocks. He indicates that these market sectors are also related to the 'technology trend', but with more attractive v

In recent months, utility, industrial and financial stocks have become hot topics on the Wall Street, as investors seek to diversify their portfolios into other areas of the market. Notably, utility and industrial stocks have both increased by more t

Reduce holdings in non-essential consumer goods and defensive stocks

In addition, Christopher also advised investors to reduce their reliance on non-essential consumer stocks as these stocks still face risks posed by tariffs and the adverse impact of lower consumer spending.

Christopher also suggested reducing investments in defensive industries such as consumer essentials and healthcare, as these sectors may not perform well under the continued upward trend of the U.S. stock market, even with the risk of a tech bubble b

Christopher pointed out that he believes that there may be positive external factors supporting the overall U.S. stock market in the future, such as the Federal Reserve's interest rate cut and corporate tax cuts. Therefore, even with the risk of high