It's time to be 'selective' with Big Tech: Nuveen CIO

Several 'Magnificent Seven' names have announced major investments in AI technology after reporting strong earnings. Yahoo Finance Anchors Brian Sozzi and Akiko Fujita are joined by Nuveen CIO Saira Malik at the Annual Milken Global Institute Conference to discuss whether there has been an overallocation in Big Tech names, leading to possible underperformance.

"I think it's the year of being selective, and you saw that last week with Meta (META), which actually put up a good quarter with 27% revenue growth. But the whisper numbers were for 30% revenue growth. Stock goes down because it's over over-owned. Now you look at Apple (AAPL), where if you look at the fundamentals of the quarter, it's more about the next iPhone cycle seasonality, trade. But the stock was under-owned. So Apple goes up. So I think that crowding in these tech stocks is important for these stocks," Malik tells Yahoo Finance.

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This post was written by Nicholas Jacobino

Video transcript

Mark LA, the founder of Avenue Capital told me because everybody is so over, I guess over allocated or over invested in the magnificent seven names in video, Apple, Amazon, you name it.We might be now looking at a year of under performance because everybody is invested in these names.Do you agree with that?I think it's the year of being selective and you saw that last week with meta which actually put up a good quarter with 27% revenue growth.The whisper numbers were for 30% revenue growth stock goes down because it's over over.Now you look at Apple or if you look at the fundamentals of the quarter, it's more about the next iphone cycle, seasonality trade, but stock was on your own.So Apple goes up.So I think that crowding in these tech stocks is important for these stocks.But then we have these more resilient ones like Amazon Microsoft with its multi year head start and artificial intelligence.These should continue to be like the little engines or the big engines that you mentioned.It's time to potentially look for defensive assets.Isn't Apple or Amazon Apple is pretty defensive because it's under owned Amazon.I think just as resilience from investing in their logistics during the pandemic.When we see, when we say defensive assets, we're also talking about areas like infrastructure, multi year positive trade for us because not only are we near showing on showing our businesses the shift to renewable energy.Both of those require more investment in the US and the components of infrastructure like utilities and waste management tend to be less economically.You mentioned the huge swings we saw on the back of some of the seven names.It's interesting to me that there seems to be on the one hand, some concern about the scale of investments that are needed to ramp up their A I offerings.And yet you look across, you know, me, I had a big number of investments that seemed to really affect their stock investors concern.But that wasn't the case with a name like Microsoft or even an A I mean, I would say that, you know, the long head start though that companies like Microsoft and NVIDIA have are important to go back to the late nineties.We were shifting to more use of the internet.There were so many companies out there and we all remember I had companies you could buy which really weren't resilient businesses, companies like Microsoft and NVIDIA I think are long term place.They have gotten such a head start in terms of investing in A I think those are going to be the long term winners barring a little bit of up and down because of their valuations and where people are positioning in the stocks.