The hottest new AI stock could be Walmart
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Wall Street is getting skeptical about the AI rally amid concerns about a potential bubble, circular funding, valuations and debt loads.
Why it matters: Old-economy stocks could be set for an AI renaissance as investors examine classic companies that can benefit from the technology.
What they're saying: 2026 "may be the year of investing in companies benefiting from all this, and kind of sidestep AI a little bit in case there's a house of cards," Ken Mahoney, CEO of Mahoney Asset Management, tells Axios.
- While this year was the opportunity to "ride the wave along with all the other growth managers in these names," in 2026, he plans to "transition more toward companies that are going to benefit from implementing AI software."
Zoom in: Mahoney gives Walmart as an example of a potential beneficiary of AI.
- It is "not a growth name necessarily," but AI can help the retailer with its inventory, logistics, software and more, things that can "really move the needle" for a company of its size, he notes.
- Walmart's margins have already improved as it has embraced AI.
Between the lines: Walmart is an "old-economy" stock that could be set for an AI renaissance, says Nancy Tengler, CEO of Laffer Tengler Investments.
- '"If you can produce more with less, that is making money," she says.
- RTX is another old-economy name she likes, given how the aerospace and defense company is incorporating AI into its manufacturing process.
Follow the money: Mahoney is not betting against the AI rally, but he does trim exposure to certain stocks whenever euphoria kicks in, or buys back on substantial dips, he says.
- This is driven by technical patterns rather than an effort to time the market, he adds.
What to watch: Whether Wall Street will broadly embrace untraditional AI plays heading into next year.
- If "growthy" tech stocks continue to drive the gains, it may be hard for portfolio managers to pitch clients on trimming profits to invest in old-school stocks.
- But if the tech rally falters, investors sticking with the classic company names that embrace technology could end up looking prescient.
