AI could be revolutionary, but don’t ‘lose your diversification,’ advisor says
With the promise of artificial intelligence not yet fully realized, investors are advised to spread their bets and not put all their eggs in one basket, according to Eric Diton of The Wealth Alliance. “Do not lose your diversification. Do not just make your portfolio one big bet on technology and AI, because nothing is a guarantee,” the firm’s president and managing director said in an interview with CNBC. “Regulation could change. There could be some unbelievable competitor out of China that blows everyone away. You don’t know.” The AI trade has been a sore spot for the market lately, as concern has mounted among investors about whether valuations are stretched too far. The tech-heavy Nasdaq Composite fell almost 2% in November, but at one point during the month was down nearly 8% from the October close, lagging behind small monthly gains in the Dow Jones Industrial Average and S & P 500 . AI stocks such as Broadcom and Palantir Technologies scored large gains in the past week, helping the market rebound from the prior week’s loss, but Diton is also bullish on the broader market beyond tech. “Companies are going to get a lot more profitable through AI, and that’s why we’re in the second inning on this thing,” he said. “It is going to change the world, and so you’ve got to be bullish on stocks. Earnings are going to be, for a lot of companies, better and better as they get way more efficient and productive.” Areas in focus Diton points to emerging markets as one way diversify, saying that “some of the greatest companies in the world happen to just not be based in the United States.” Helped by a weaker U.S. dollar, emerging market stocks have almost doubled the return in the S & P 500 this year. U.S. large caps are ahead more than 16% in 2025, while the iShares MSCI Emerging Markets ETF (EEM) – which tracks large- and mid-cap emerging market stocks – has soared nearly 30%. EEM .SPX YTD mountain EEM vs. S & P 500, year-to-date Health-care stocks are another area to lean into, the money manager said. The group has led all 11 S & P 500 sectors in the last few months, climbing 8% in one month and 16% in three months. Diton, a Columbia Business School MBA, also likes utilities, which he calls a “stealth AI play.” Utilities are more than 19% higher in 2025, the third best performing sector in the S & P 500. “Power needs are just growing exponentially, and that plays right into utilities,” Diton said. “They’ve been boring forever, but they’re not as boring now.”
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