Big Banks & AI: The Dynamic Duo You Can’t Afford to Ignore

Mach 7 stocks took a hard hit earlier this year after years of rallying, but now they're back.

And as of June 10th, the Mach 7 surged 33% since the market's 2025 low in early April, outperforming the broader market, and it's a big time comeback for big tech and the appetite for growth and innovations is far from gone.

So where are the opportunities here?

Joining me at the York Stock Exchange to weigh in.

There's Renee Reyna, head of thematic and specialty ETF strategy Adam.

Rene, thank you so much for joining me.

Thank you for having me.

Well, first and foremost, when it comes to AI exposure, there's so many ways to get access here.

So how do we identify the opportunities and the specific names?

Yeah, great question.

So I think Many times investors think probably individual stocks.

So how can I find the growth opportunity with an individual name?

I think what we find is as this AI theme accelerates and expands, investors are looking perhaps for a more diversified way.

In my world, I cover thematic ETFs, and so we have Exposures where investors can get targeted AI stocks in a portfolio, but also in some cases expand and get multiple themes such as robotics, automation so it really offers diversified ways for investors to get exposure to this long term trend and theme.

And for retail investors out there who are watching right now when they're thinking about exposure to the AI play, they might be thinking data centers, so real estate as well.

But when it comes to themes, what are some additional themes that you're paying attention to?

You're exactly right.

So when we think about AI, we think about a value chain.

So there's multiple ways you can get exposure.

Nvidia always comes to mind, especially you mentioned the mag 7 to kick this off.

So semiconductors is one way you can play that, but you're absolutely right.

You have data centers, you have cloud computing companies.

You have software development companies.

Think Robotics Automation, so there's a lot of different ways investors can get exposure to this theme, and it continues to evolve and grow.

And so I think the nice thing about this space is every day we're learning how AI is going to impact our lives, whether it's assist, whether it's automate or augment, and the theme just continues to grow and expand.

And Renee, when it comes to assessing the growth potential here, give us an idea of what goes into your work.

Yes, so when we think about this space.

We we generally look at a couple of things.

I think the highest level is always like what does the TAM or to adjustable market look like?

And there's a lot of big numbers that get thrown out there, you know, 1 trillion, 2 trillion.

But I think also we're looking at sort of how AI is evolving and so we went to sort of thinking about AI enablers, adapters, hyper scalers.

I think it's sort of the next trend we're seeing is around software.

So really just trying to understand.

And how do we now think about monetizing some of these capabilities so AI as it continues to rapidly grow, I think software is sort of this next component that we're going to start seeing sort of AI activated in a more meaningful way.

So we just, we monitor those growth trends clearly we're listening to earnings calls and understanding what companies are doing in this space and we have a great ETF as well that gets exposure to the theme.

And I do want to focus on another sector that you keep your eyes on, and that is financial, specifically big banks.

And when we look at the S&P 500 right now, we are looking at it still holding above the 6000 level and within the S&P 500, we know that financials are doing well.

They are in positive territory year to date, so why big banks?

Yeah, so it's an interesting story and I think when we saw after the most recent elections, so once Trump won, we saw bank stocks really rally, and it was really predicated around the idea that this party is going to deregulate.

It's going to lower taxes, and this should serve as a tailwind for US large banks.

A lot has happened since the election, as we all know, tariffs, recession fears, and during that period of time, I think when we look at large banks, we noticed a couple of interesting components.

Think one, banks are generally more conservative sort of value oriented companies.

So for a long term investor, you know, it's a really good sort of cohort of companies to own.

But since we've seen some of these recessionary fears. tariff announcements we've seen banks evaluations become more attractive and so I think that's one part of it is valuations today look attractive.

Large banks have very diversified revenues, so think of trading we're here in the exchange, asset management businesses, capital markets, as well as traditional banks and deposits.

So that interest margins continue to be relatively healthy.

Think of the yield curve, so that's helping.

Banks in terms of their their interests and then we just continue to monitor what's happening around the consumer recessionary fears seem to be declining, so we just think that large banks are positioned well.

They are raising you know increases I should say the reserves so putting capital buffers into play in case there's a recession again, everyone's sort of tracking the employment.

Uh, data, economic data, and so we just think that these groups of companies can be a good place to allocate Invesco's KBWB.

ETF, which tracks the Invesco KBW Bank index, is comprised of 25 US large bank stocks.

It's a modified market cap with exposure.

It reconstitutes and rebalances every single quarter and it just gives you really targeted exposure.

And so we think this is a great way you can play the theme.

And if you think about what we're talking about today, AI and banks, if I think about how banks are also integrating AI into their.

Ecosystem, we think that there can also be sort of a net positive impact there as well.

So you can play the AI theme with IGPTs or ticker on that fund, 100 names, focus on AI robotics, automation software development, or you play the banks, and I think that's one way to where different type of exposure, but in today's marketplace, you know, it could be an attractive entry point.

OK, Renee, we will have to leave it there, but thank you so much for joining me and thank you for sharing your insights.

Happy to be here.