13 Stocks to Watch in Case of a Market Reversal: Where to Look for Ideas After the AI Sector Boom

At the end of June, Bank of America noted a market reversal: investors are trying to reduce their concentration on a narrow segment of AI leaders, as well as capitalize on the U.S. administration’s focus on increasing housing affordability. Evgeny Shatov, an investment manager and partner at the investment firm Capital Lab, has selected 13 companies worth watching amid this market shift.

On June 25, Bank of America noted in its report , *The Flow Show: Small is Big*, that market participants are shifting from stocks of the largest companies—the leaders in the AI race—to stocks in the semiconductor sector. In addition, they are trying to anticipate U.S. President Donald Trump’s policy focus on increasing housing affordability and are investing in less liquid cyclical assets—small- and mid-cap companies, the housing sector, and real estate investment trusts (REITs).

The initial funding in the AI cycle went to mega-cap companies, which sparked a veritable race in capital expenditures. But as their valuations and the scale of their investments grow, the market inevitably begins to ask: “Which companies will be the next to benefit from increased AI spending?” and “In which segments have multiples not yet fully reflected the new cycle?”

The response put forward by investors (as described by BofA) can be summarized as follows: there is no need to focus on a narrow segment of AI-related companies. This is a reasonable idea, but it requires a high degree of discipline: the goal here is not to “buy” the entire sector, but only those companies that stand to benefit from sector rotation, have a strong balance sheet, and are reasonably valued.

Investing in semiconductor companies is, on the whole, a straightforward concept. Back in April of this year, BofA raised its revenue forecast for the global chip market to $1.3 trillion in 2026, which is $300 billion higher than the forecast the bank’s analysts had presented four months earlier.

At the same time, they specifically highlighted the expansion of demand beyond the narrow circle of AI leaders. If the AI cycle does not fizzle out, not only will the manufacturers of the most expensive accelerators benefit, but so will the entire stack: memory, networking solutions, analog components, chip manufacturing equipment, infrastructure electronics, and power management.

That makes sense: second-tier companies in the industry often offer better returns when the first-tier companies are already too expensive.

But this is precisely where the main risk lies. After a strong rally, the sector remains sensitive to any hint of a slowdown in AI demand. The semiconductor market already experienced a sell-off following the release of the BofA note. If major customers begin to hold back on investments in the future, or if the returns on these investments turn out to be lower than market expectations, the semiconductor sector will be the first to suffer. Therefore, betting on it is justified solely as a more diversified and selective way to capitalize on that very AI hype.

The construction and housing sector seems to be more of a political issue. Earlier, the Financial Times reported on attempts by U.S. President Donald Trump’s administration to advance an agenda aimed at increasing housing affordability: lowering mortgage costs and restricting investment funds’ ability to purchase single-family homes. For the White House, this issue—along with improving the standard of living for Americans in general—is one of the most sensitive topics ahead of the midterm congressional elections this November.

And although the current U.S. administration’s policy remains inconsistent, and there is always a risk of a reversal, investors are already trying to profit from it. The main beneficiaries of this trend are contractors, real estate developers, and some suppliers of building materials.

But there is an important turning point here as well. The construction sector is highly sensitive not to rhetoric, but to the real cost of money. According to Freddie Mac, the average rate on a 30-year mortgage in the U.S.—the key indicator for home purchases in the country— stood at 6.49% as of the end of June 2026. It has fallen, but it is still quite high, so housing remains expensive for the average buyer.

Betting on developers is justified only in a scenario where financing costs gradually decline and inflation stabilizes; otherwise, the market will quickly hit the ceiling of effective demand.

The same can be said of REITs. Real estate investment trusts could receive significant support—in the form of a more accommodative monetary policy, lower mortgage rates (which are tied to the yield on 10-year Treasury bonds), and support for housing construction and supply. When the market buys real estate and REIT assets, it often anticipates a scenario in which long-term bond yields will, at the very least, stop rising—or, even better, begin to fall.

But if high inflation persists in the U.S.—and with it, persistently high long-term interest rates—REITs will quickly lose some of their investment appeal.

The new market rate does not appear to be a speculative fantasy, but it is justified if three conditions are met:

— The topic of AI development remains relevant, and its impact is spreading to other sectors;

— U.S. bond yields do not rise sharply (for example, in the event of another geopolitical escalation);

— The U.S. administration's political agenda remains unchanged.

If even one of these conditions is not met, the idea may not work.

In the semiconductor sector, it makes sense to look not only at the most obvious giants, but also at those in the second tier of AI infrastructure: Micron is a bet on memory, Broadcom is a beneficiary of networking and custom AI infrastructure, AMD is an alternative in computing, Marvell is a play on the interconnect and data center networking technologies sector, and KLA and Lam Research are plays on growing capital expenditures on equipment and the expansion of the production cycle.

In the housing sector, D.R. Horton, Lennar, and Toll Brothers—as well as building materials supplier Builders FirstSource —stand out as beneficiaries of potential growth in housing demand and construction activity.

The REIT market cannot be viewed as a single entity. The strongest performers in the market are not the most troubled segments, such as office real estate, but rather the higher-quality market niches: residential real estate investment trusts, select infrastructure projects, logistics, and private warehouse storage. Where cash flow is stable and the balance sheet isn’t overburdened, a rate cut can indeed quickly lead to a revaluation.

Here, one should focus first and foremost on the high-quality “brands” in this industry, such as AvalonBay, Equity Residential, and Mid-America Apartment Communities.

This is not an investment recommendation.

This article was AI-translated and verified by a human editor