How small and big investors are picking AI winners

Amid discussions on potential labor market softening and consumer spending shifts, Lee Baker of Claris Financial recommends Costco (COST) as a beneficiary due to its value proposition and strong membership model. Concurrently, the sustainability of AI valuations is under scrutiny, with Thoma Bravo's Orlando Bravo warning of a bubble, while experts advise focusing on AI companies with clear use cases, scale, and infrastructure. Schwab data indicates retail investors are becoming more selective in AI, favoring names like Nvidia, CoreWeave, Oracle, and Palantir, while being net sellers of AMD and Broadcom, signaling a focus on clear monetization and leadership.

Analysis

(This is a wrap-up of the key money moving discussions on CNBC's "Worldwide Exchange" exclusive for PRO subscribers. Worldwide Exchange airs at 5 a.m. ET each day.) Investors are looking for ways to play the potential softening of the labor market and consumer spending. Plus, a look at how retail traders are viewing AI-related stocks. 'Worldwide Exchange' pick: Costco (COST) Lee Baker of Claris Financial likes Costco despite the stock being flat year to date. Baker sees the big-box retailer as a potential beneficiary of a slowdown in the labor market and consumer spending. "When they (consumers) don't have more money to spend, they look at ways to stretch those dollars," said Baker. "Costco allows you to say this Kirkland brand is really good (the house brand for Costco) or instead of just popping into the grocery store and buying whatever that particular staple is, yeah, I may drive a little bit out of my way, but I'm going to go pick up my pasta and these other goods at a Costco in bulk to save on those dollars from a long term perspective." Baker also likes the membership model that he said has an roughly 90% renewal rate. Picking the AI winners Recent comments and reports about the AI trade have raised new questions about the sustainability and identifying the winners. Thoma Bravo founder Orlando Bravo told CNBC on Tuesday that AI valuations are in a bubble and an Information report questioned the profitability of Oracle's cloud business Maja Vujinovic of FG Nexus said Wednesday that AI is in the early stages but sees a few principals all investors should follow. "You should be looking at companies that have a real use case, that have scale, that have a utility, that have impact and that have infrastructure. If you have those two, three things, I think I would be more excited about investing in AI," she said. Schwab on the AI trade Joe Mazzola, head of trading and derivatives at Schwab, said retail investors are still invested in the AI trade but are growing more selective about the names they are investing in. "I think the clear demarcation is, how are they monetizing, who is the clear leader at this point," said Mazzola. He added that Schwab clients in September were net buyers of Nvidia , CoreWeave , Oracle and Palantir and net sellers of AMD and Broadcom . Mazzola pointed out these moves were before recent news reports related to AMD/Open AI and Oracle. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . ) Claris Financial's Lee Baker identifies Costco (COST) as a potential defensive beneficiary in an anticipated softening labor market and consumer spending environment. Despite being flat year-to-date, Costco's value proposition through bulk purchases and its Kirkland brand is expected to appeal to consumers seeking to stretch their dollars. The company's robust membership model, boasting an approximate 90% renewal rate, provides a stable revenue stream amidst economic uncertainty. Concerns over AI valuations are escalating, with Thoma Bravo's Orlando Bravo describing them as a bubble, further amplified by questions regarding Oracle's cloud business profitability. Investors are advised by FG Nexus's Maja Vujinovic to seek AI companies demonstrating real use cases, significant scale, clear utility, and essential infrastructure for sustainable long-term investment. Schwab data indicates retail investors are growing more selective in their AI exposure, emphasizing clear monetization and leadership. In September, clients were net buyers of Nvidia (NVDA), CoreWeave, Oracle (ORCL), and Palantir (PLTR), while being net sellers of AMD (AMD) and Broadcom (AVGO). These positioning adjustments occurred prior to recent news concerning AMD/Open AI and Oracle, suggesting an early shift in retail preferences.

Key Decisions for Investors

• Consider defensive positioning in consumer staples and value retailers like Costco, given its strong membership model and appeal to cost-conscious consumers amidst expected economic softening.
• Approach Artificial Intelligence investments with increased scrutiny, prioritizing companies with demonstrated monetization paths, robust infrastructure, and clear use cases, rather than speculative plays.
• Monitor shifts in retail investor sentiment and positioning within the AI sector, noting specific net buying and selling trends in key names as indicators of evolving market leadership and potential momentum.