Watch full episode: U.S. stock valuations may look stretched but veteran strategist Brian Belski isn’t worried. In this episode of In the Money with Amber Kanwar, the Chief Investment Strategist at BMO Capital Markets shares why he’s still bullish on U.S. equities, but warns that now more than ever, stock picking matters.
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1. Cybersecurity: The Under-the-Radar AI Beneficiary
While most investors focus on semiconductors and software as AI winners, Belski emphasizes the critical need for cybersecurity as AI adoption accelerates.
Why Belski is bullish:
• AI expansion brings growing risks: As AI models get more sophisticated, the potential for fraud, identity theft, and system breaches increases.
• Security becomes non-negotiable: Protecting sensitive data and digital infrastructure becomes even more crucial as AI proliferates.
• Strong demand for key players: Companies like Palo Alto Networks and Check Point Software are well-positioned to benefit from rising global cybersecurity spending.
2. U.S. Financials: A Sector Ready for a Rebound
After years of underperformance, Belski sees renewed opportunity in the financial sector — particularly among large U.S. banks.
Why Belski is bullish:
• Large banks benefit from scale: Institutions like JPMorgan, Goldman Sachs, and Bank of America have diversified businesses across wealth management, lending, and capital markets.
• Market overreaction created opportunity: Fears of a broad financial crisis post-2023 were overstated, leaving high-quality names undervalued.
• Policy shifts favor consolidation: Potential deregulation could spark mergers and acquisitions, benefitting well-managed financial institutions.
3. Small Cap Value: The Contrarian Multi-Year Opportunity
Belski highlights U.S. small-cap value stocks as a long-term opportunity often overlooked by mainstream investors.
Why Belski is bullish:
• Steady decline in small-cap companies: The shrinking pool of small-cap names creates scarcity value.
• Improved fundamentals: Many small-cap companies are delivering consistent earnings growth, paying dividends, and maintaining strong balance sheets.
• Liquidity advantage over private equity: Unlike private equity, small-cap stocks provide transparency and liquidity while still offering growth potential.
