Last month, when concerns about an AI bubble spilled over and sparked a sell-off, stocks spent several weeks in a pullback. However, the fallout adversely affected some equities more than others—even those that have no direct ties to the AI industry.
While a stock being oversold doesn’t imply that it’s undervalued, statistical principles do suggest that a reversion to the mean is increasingly probable, especially for companies with well-established track records, strong income statements and balance sheets, and competitive moats.
