The case of AI and Big Tech despite the Nasdaq’s worst week since April

State Street maintains its bullish stance on the AI ​​trade despite Nasdaq’s worst week since April.

Chief business officer Anna Paglia said momentum stocks still have strengths as investors are reluctant to move on from a growth story that has delivered year-round profits.

“How wouldn’t you like to be a part of the development of AI technology? Everyone has been waiting for the cycle to turn from growth to value. I don’t think that has happened yet because of the dynamics,” Paglia told CNBC “ETF edge” earlier this week. “I don’t think a rebalancing trade will happen until we see a signal from the market that these big trends are slowing down.”

Paglia, who has spent 25 years in the exchange-traded fund industry, sees a greater likelihood that the market will cool early next year.

“There will be a much greater emphasis on diversification,” she said.

Her company manages several ETF funds with exposure to the technology sector, including: SPDR NYSE Technology ETFwhich has already gained 38% since Friday’s close this year.

However, the fund retreated more than 4% over the past week as investors took profits in AI-related names. The fund’s second-largest position at Friday’s close is Palantir Technologies– according to the State Street website. Its shares have fallen more than 11% this week following the company’s action results report on Monday.

Despite the decline, Paglia reaffirmed her bullish stance on the technology in a statement to CNBC late this week.

Meanwhile, Todd Rosenbluth suggests that the market is already starting to rotate. It points to a renewed appetite for health care stocks.

” Healthcare Select sector SPDR Fund… which had been out of favor for most of the year, started to come back into favor in October,” the company’s research chief said in the same interview. “Health care tends to be a more defensive sector, so we’re watching to see if people continue to gravitate toward that as a way to diversify away from some of these sectors, like technology.”

Underperforming Health Care Select Sector SPDR Fund technology this year it has increased by 5% since October 1. It was also the second best result S&P500 group this week.