These stock-market experts don't love AI. Here's what they do recommend.

By Mark Hulbert

The favorite stock of investment newsletters may surprise you

Take a peek at the stock market's most attractive sectors, according to investment newsletters.

I'll bet you think that investment newsletters' most-recommended stock is Nvidia Corp., the AI-chip-producing giant whose stock has gained more than 30,000% over the past decade.

And if you were told that this is not the case, you'd at least guess that the most recommended industry is still related in some way to artificial intelligence.

You'd be wrong on both counts. It's not even close, in fact. Based on the three dozen model portfolios monitored by my performance-auditing firm, investment newsletters' most-recommended stock currently is Bristol Myers Squibb (BMY), the pharmaceutical company. Nvidia (NVDA) is far down the list of these newsletters' most-recommended stocks.

Not only are the newsletter editors not seduced by the AI craze, they are inclined to bet against it for contrarian reasons. They recognize that Bristol Myer Squibb has been struggling of late - down 15% for year-to-date performance, for example, in contrast to a 32.4% gain for Nvidia and a 13.0% gain for the S&P 500's SPX total return index. But given its attractive valuation - a forward P/E ratio below 8, for example - the newsletter editors think it's a better idea to pick up this stock at attractive prices rather than bet on AI-related stocks at their sky-high valuations.

Furthermore, these newsletters' most recommended industry sector is financials. The industrials sector, which focuses on producing capital goods rather than AI, is in second place. Information technology is in fifth place out of 11.

Why would investment newsletter editors be less than enthusiastic about Nvidia in particular and the information-technology sector in general?

No doubt there are many reasons, but one major clue comes from a study that the National Bureau of Economic Research recently began circulating. It's called "Do Markets Believe in Transformative AI?" and was conducted by Isaiah Andrews, an MIT economics professor, and Maryam Farboodi, an associate professor of finance at the same institution.

The professors focused on the behavior of long-term interest rates in the wake of major AI-model releases from 2023 through 2024. They found that long-term Treasury, TIPS and corporate bond yields fell in the wake of those releases, on average, and remained lower for weeks. This result is not what one would expect on the theory that AI would "soon lift annual GDP growth to 20%-30% a year," as the Economist recently put it when summarizing the views of the "evangelists of Silicon Valley."

On the assumption that you agree with the reality check provided by this new research, below is a ranking of the stock market's most attractive sectors, according to the percentage of newsletters' currently-recommended stocks that appear in each.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. He can be reached at mark@hulbertratings.com.

-Mark Hulbert

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-16-25 0730ET