Major investors are shifting from overvalued AI stocks to potential winners, reminiscent of the 1990s dotcom era. Strategies include moving into reasonably valued assets like software groups, robotics, and Asian tech. Asset managers are wary of the AI bubble, diversifying within the AI sphere and exploring new AI-related sectors such as uranium and robotics groups.

Investors are cautious about the rush to build AI data centers, fearing overcapacity similar to the telecom fiber-optic boom. Some hedge their U.S. tech positions with European and healthcare assets to mitigate potential losses from an AI stock crash. Despite strong earnings from top AI stocks, concerns persist about a possible bubble, prompting a shift towards Chinese stocks as a hedge.

Amid the AI craze, investors are drawing parallels to the dotcom bubble of 1999, emphasizing the importance of being nimble and diversified to navigate potential market volatility. The challenge lies in timing the phases of the bubble to maximize profits while avoiding significant losses. The current market environment signals a cautious optimism, with a focus on identifying growth opportunities that may be undervalued by the market.

Read more at Yahoo Finance: Analysis-Investors use dotcom era playbook to dodge AI bubble risks