Citrini Research says investors should cool it with the AI mania.
The firm whose viral prediction about the dire economic impacts of AI says the market's top trade is looking crowded, and that investors should start looking for more under-the-radar themes to play.
The AI market's "blind spot" is the focus of Citrini's latest note this week on "small themes" that the firm sees as opportunities for a rotation.
"The mechanism we care about is simple enough," Citrini wrote. "Capital crowds into one theme, while names outside it get under-owned, which is mildly interesting in and of itself. These names also get under-modeled and overlooked."
Citrini broke down the three trades its analysts say are likely to benefit from broader trends as investors look for new winners outside of artificial intelligence.
Airlines: Delta and United
The firm is bullish on US airline stocks, maintaining a view that its held for a few years. In November 2024, Citrini wrote about a "structural reset" it was eyeing in the sector that would make United and Delta Airlines likely stock winners.
More than two years later, it remains constructive on both stocks, noting that both were weighed down by macro trends that had nothing to do with airlines directly. Now, the firms sees strong growth ahead for both names as the economy moves on from both tariff-driven inflation and the Iran war oil shock.
"The K-shaped economy is only getting more… K-ish," Citrini stated. "And the mainline carriers know it. They're actually leaning into it."
It added that the World Cup is likely to help boost travel stocks as the global event keeps soccer fans on the move.
Senior Living: Welltower, Brookdale, and Janus Living
Citrini also sees potential in a growing industry that may be overlooked by investors simply because it's not as flashy as high-flying tech and AI trades: senior living facilities.
In its analysis, the firm highlighted just how fast the over 80 population in the US is growing, emphasizing that there aren't enough facilities to house the rapidly aging Baby Boomer generation.
"The 80-and-over population in the US is expected to grow by more than 56% over the next decade, dwarfing total population growth of around 5%," it noted. "One million additional 80-plus households will materialize this year alone, doubling to two million by 2029."
Citrini's analysts see a key opportunity for investors to benefit from this trend, specifically through senior living facility stocks and real estate investment trusts. It named REITS Welltower and Janus Living as two of its top senior living picks, with retirement home operator Brookdale Senior Living as the third.
Live events: TKO Group, Cinemark and IMax
Citrini's third investment is one it says is the past decade's best performing asset class, even more so than tech. The firm is highly bullish on live events, describing physical presence as a luxury good, highlighting a willingness among consumers to pay steep prices to be onsite for major events.
"Sports franchises, and to a greater extent — all IRL events — are benefitting from a desire to be present," Citrini wrote. "With that comes an increased opportunity to monetize through attendance, premiumization, and promotion."
The note highlighted strong financial growth and lucrative partnerships from TKO Group, the owner the WWE and UFC. It also said that consumers are returning to the movies, as reflected in the growth of theater chain Cinemark. However, Citrini also added that theater goers may be wanting more than simply seeing a film, which could bode well for IMAX, shares of which have rallied to record highs earlier this month.
