Ritholtz's Josh Brown says investors should rotate out of Magnificent 7 into broader AI plays

According to CNBC, Ritholtz Management co-founder and CEO Josh Brown said investors should shift in the second half of this year out of the Magnificent 7 and other hyperscalers and into a wider group of stocks as part of a broadening-out trade. Brown said non-hyperscalers showing business improvement from AI-related upside earnings surprises are the kind of names investors should focus on. He cited Travelers Companies and Chubb Limited as insurers that fit the theme, and he also named Caterpillar and GE Vernova as industrials that offer exposure to the trend. Brown's comments followed Alphabet's Wednesday increase to its 2024 capital expenditures forecast to between $195 billion and $205 billion, a move that triggered selling in hyperscaler stocks on Thursday, including Meta Platforms, Microsoft and Amazon. Travelers and Chubb were both up between 1% and 2% Thursday, while Caterpillar rose about 1% and GE Vernova gained 5%.