Market sentiment has cooled due to rich valuations and macro concerns, including Iran-related turbulence and U.S. growth uncertainty, contributing to a rotation away from AI leaders.

Even with the rotation, the AI boom isn’t over, as demand for AI products, real-world deployments, and profitable AI components and data-center infrastructure remain intact.

The investment takeaway is to stay patient with high-quality AI positions and consider adding when valuations are attractive, given the persistent long-run earnings potential.

The AI stock rally of recent years has driven broad market gains, with Nvidia and Palantir posting extraordinary gains as investors chased high-growth AI names.

Amid the turbulence, investors have rotated into consumer staples, with safer, steadier equities like Walmart, Costco, Coca-Cola, and Procter & Gamble driving gains in funds such as the Vanguard Consumer Staples ETF.

In the first quarter, Costco and Walmart outperformed Nvidia, signaling a shift in market dynamics and contributing sizable adjustments to market capitalization (Costco +$60B, Walmart +$103B, Nvidia -$300B).