Investors should diversify equity exposure beyond AI trade, says Schroders' Adam Farstrup

• Investors should diversify equity exposure beyond the concentrated 'AI trade' to mitigate risk.
• Opportunities exist in value outside the US, cyclicals, and European bank stocks.
• Inflation data gives the Fed 'breathing room', but its reaction function remains a key market risk.

Adam Farstrup from Schroders advises investors to diversify their equity exposure beyond the concentrated 'AI trade'. He suggests maintaining long positions in US exceptionalism and technology but complementing them with value outside the US, cyclicals, and European banks. He notes that inflation data provides the Fed with 'breathing room', but the uncertainty surrounding its reaction function remains a key market risk. He anticipates stocks will continue to rise, driven by either sustained earnings beats or multiple expansion.