Sissons Favors Alphabet, McKesson, Nestlé Amid AI Rotation

Darren Sissons, a portfolio manager at Campbell, Lee & Ross Investment Management, is watching the market make a quiet but significant shift. The broad indexes—the S&P 500 and Russell 2000—have climbed 21.75 percent and 34.75 percent respectively over the past year, yet beneath those gains lies a reshuffling that tells a different story. Some of the most celebrated technology companies are stumbling. Meta has fallen nearly 29 percent. Microsoft is down almost 7 percent. Tesla has barely moved, gaining just 3.55 percent. Meanwhile, investors are rotating capital toward companies with clear artificial intelligence exposure and away from those perceived as lacking it. The shift is subtle at the index level but unmistakable to those watching individual stocks.

The quarter that produced these moves was shaped by two broad forces: inflation continued its decline, helped along by falling oil prices as Russia and the United States increased crude exports and China drew down strategic reserves. At the same time, corporate earnings came in broadly positive or met expectations. Consumer spending remained resilient—Visa reported double-digit growth, and New York City rents climbed to a median of five thousand dollars per month, a marker Sissons reads as a sign that financial health on Wall Street has not yet curdled into widespread distress elsewhere in the economy.

Sissons sees opportunity in this moment, particularly for investors who bought into companies that had faced excessive pessimism about their AI prospects. His three top picks reflect a deliberate positioning: Alphabet, McKesson, and Nestlé. Alphabet trades at 16.7 times forward earnings, well below its historical average of 30.2 times and only slightly above its historical low of 19.1 times. The company has compounded earnings per share at 26 percent annually over the past decade. Advertising remains its engine, but subscriptions, platforms, and cloud services have matured into meaningful revenue streams. Management continues to invest heavily in artificial intelligence infrastructure. The company initiated a dividend in 2024 and now yields 0.25 percent.

McKesson represents a different kind of opportunity: defensive growth in a concentrated industry. As the largest pharmaceutical distributor in the United States, it operates within a three-company oligopoly with formidable barriers to entry. More than one million healthcare providers and fifty thousand pharmacies depend on its network. Ninety-five percent of its revenue flows through a stable, flat-fee procurement model that proves resilient regardless of economic conditions. The company has returned 17.5 percent annually in Canadian dollars over the past decade, while dividends have grown at 15 percent per year and share buybacks have reduced the share count by an average of 6 percent annually. McKesson plans to spin out its Medical-Surgical business through an initial public offering in mid-2027, with the unit valued at approximately thirteen billion dollars, or 11 percent of the company's current market capitalization. The stock yields 0.50 percent.

Nestlé offers the highest yield of the three at 4.2 percent, with dividends that have grown 6 percent annually in Canadian-dollar terms since 2016. The company owns a portfolio of global consumer staples that spans Nescafé coffee, Häagen-Dazs ice cream, Purina pet food, DiGiorno pizza, KitKat chocolate, Perrier water, and Starbucks Coffee At Home. Over the past decade, the dividend growth rate of 4 percent annually was amplified by a 29 percent appreciation of the Swiss franc against the Canadian dollar. The stock now trades 4 percent below its twenty-year average low valuation and 31 percent below its average high, suggesting room for revaluation.

Sissons's prior picks offer a mixed record. A year ago, he recommended Novo Nordisk at fifty-five dollars; it now trades at forty-six dollars, a loss of 12 percent including dividends. Tourmaline Oil, recommended at fifty-eight dollars, has climbed to sixty-two dollars, a 10 percent total return. Visa, at three hundred fifty-one dollars then, now sits at three hundred sixty-eight dollars, a 5 percent gain. The three picks averaged a 1 percent total return. The message embedded in his current selections is clear: the market is repricing technology stocks based on artificial intelligence exposure, and investors who position themselves ahead of that rotation stand to benefit. Those who hold technology names without meaningful AI credentials should exercise caution.