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AI needs a 'core place' in every portfolio: Strategist

With the rise of AI, many industries are looking to incorporate it into their services and products. Slatestone Wealth Management Chief Market Strategist Kenny Polcari joins Yahoo Finance Live to discuss Amazon's (AMZN) investment in Anthropic and how investors can invest in AI.

Polcari states that although AI is “very much in its infancy” it is already incorporated into a lot of businesses—"you’re going to get AI exposure” he notes. For investors looking for opportunities to boost their portfolio, Polcari suggests looking “in other parts of the space” due to the difficulty of investing directly into venture deals.

Regarding the buzz around AI, Polcari insists “this AI story is just beginning” and that it needs to have a “core place” in every investor’s portfolio.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

- And in your Substack this morning, you're not talking about Microsoft. You're talking about a different company and Amazon here. Why is that? Why the prioritization there? And we'll get to the bottom of this--

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KENNY POLCARI: Well, in that case, because Anthropic. Microsoft-- I mean, Amazon made this announcement that they're going to spend $4 billion on this AI technology from this company called Anthropic, which is a privately held company. So you can't play that one yet. Although, I'm sure it's only a matter of time before that comes to the market as well.

So the only way you can really play that if you play it through Amazon-- and that's what you saw yesterday, people buying-- rushing in to buy Amazon. It was up nearly 2%. 1.7% yesterday. So for investors that are looking for the opportunities and specifically in the AI space, you have to play what you can play with unless of course you're able to get in on the venture deals.

But for the average investor, they're not. So you have to look in other parts of the space if you want exposure. And look, I think we've talked about it before. AI is really common almost in every industry out there. So you're going to get AI exposure, whether it's in health care, whether it's in banking, whether it's in fintech, whether it's in Amazon and consumer and retail. You're going to get exposure to AI.

But yesterday's announcement was significant enough because they came out talking about how their cloud computing division is seeing huge demand for AI. And we all know this. AI is very much in its infancy. So if you want exposure to it, you have to find the places where you can. Anthropic, at the moment, you cannot invest directly in. But you can do it via jumping on the back of Amazon.

- Kenny, how much of the excitement around AI when we talk about the AI frenzy obviously one of the big drivers of the market at the start of the year? Is it still going to be a big driver as we look into the end of 2023 and then ahead to 2024?

KENNY POLCARI: Yeah, listen, I think AI is very much in its infancy. So I think this AI story is just beginning. So whether or not-- we're not-- we may not see the same surge higher in the last three months of the year that we saw in the beginning of the year. But I think the AI story has just begun. So it's not a place that people should say, oh, well, this game is over. Let's move on to something else.

I think that's a big mistake. I think you have to continue to stay involved in it. And maybe you're not-- maybe you're not chasing it the way people were chasing it earlier in the year. Give it a chance to kind of retreat. And I actually think you may see that. And you've already started to see some of those names pull back.

Like c3.ai, which is kind of one of the names in the space, had really a tremendous move early in the year. But it has now backed off. But it doesn't mean that the game is over at all. I think AI needs to be part of really now a core-- it needs to have a core place in everyone's portfolio.

Depending on the percentage, it's going to depend on who you are, right? You're 35. I'm 62. So the percentage of my portfolio is going to be different than yours because you've got more time than I do, right? I'm on the back nine. You're still on the front nine.

[LAUGHTER]

- Look, I'm hoping that I'm still in the driving range warming up, Kenny.

- OK, well--

- And I think you're still on the front nine too.

- I hope you are too. I'm certainly not on the driving range.

[LAUGHTER]