Inside Kim Bolton's May 2024 Market Outlook

Exploring the Latest Market Insights and Top Stock Picks from Kim Bolton of Black Swan Dexteritas

Editorial Team (ET)May 9, 2025

In the fast-paced world of technology stocks, few voices command as much respect as Kim Bolton, president and portfolio manager of Black Swan Dexteritas (BSD). As we navigate the volatile waters of the current market, Bolton's insights and top picks provide invaluable guidance for investors. Today, we delve into his latest recommendations and market outlook as of May 22, 2024.

Market Overview

The stock markets experienced a notable dip of almost five percent from their early April peak, primarily due to uncertainties surrounding the anticipated easing cycle, especially in the United States. Geopolitical risks have further fueled these market fluctuations. However, this downturn proved to be short-lived. The broad market indices have since rebounded, recovering fully from April's slump. Investors now anticipate interest rate reductions in the fall, bringing a wave of optimism back to the market.

The generative AI revolution continues to dominate headlines, with Nvidia's recent earnings report underscoring its ongoing impact. As we approach a summer filled with speculation about central bank policies, the AI ecosystem's focus remains on two key groups: the implementation players and the infrastructure participants. The latter includes companies whose products form the backbone of AI's rollout, such as chipmakers, software firms, and data center equipment makers. Although this group has pulled back from its highs in early March, the broader implications of AI's expansion are evident.

Sector Performance

Within the tech sector, chipmakers, software companies, and data center operators have experienced varying levels of performance. The initial surge in AI-related stocks has stabilized, with investors taking a more measured approach. Meanwhile, the utilities sector has seen a significant rise, driven by expectations of increased energy demand due to AI advancements. This juxtaposition highlights the multifaceted nature of the AI revolution, which is both broadening and deepening across industries.

The BSD team's active management approach has proven effective in these volatile markets. By continuously trimming securities that have reached their intrinsic values and acquiring growth stocks with longer, more lucrative investment runways, they have managed to navigate the ups and downs adeptly. Additionally, their hedging overlay serves as a crucial tool for capital protection in bearish markets and can be dialed down during bullish phases, ensuring a balanced and proactive investment strategy.

Kim Bolton's Top Picks

Cisco Systems (CSCO NASD)

Cisco Systems is a global leader in networking technologies, providing infrastructure platforms that include switching, routing, wireless, and data center products. These solutions are designed to work seamlessly together, delivering robust networking capabilities and facilitating data transport and storage.

Cisco's extensive portfolio of networking solutions sets it apart from its competitors. As a trusted provider, Cisco plays a critical role in the networking landscape, cementing its position as a key procurement partner for suppliers. This broad offering not only enhances its market presence but also ensures a steady demand for its products.

Bolton's confidence in Cisco stems from its market leadership and the essential nature of its products. The company's financial performance has been solid, and its growth prospects remain promising as networking technologies continue to evolve.

Western Digital (WDC NASD)

Western Digital is a leading global data storage company, renowned for its comprehensive portfolio of hard disk drives (HDDs), solid-state drives (SSDs), and NAND flash memory solutions. Its established brand and market position provide a competitive edge in the data storage industry.

Western Digital's products are indispensable across various industries, including technology, telecommunications, automotive, healthcare, and media and entertainment. By serving a diverse range of markets such as consumer electronics, enterprise storage, cloud data centers, and automotive, the company mitigates risks associated with reliance on a single market segment.

Bolton highlights Western Digital's market diversification and its competitive advantages as key reasons for his selection. The company's ability to cater to multiple industries ensures stability and positions it well for sustained growth.

Digital Realty Trust (DLR NYSE)

Digital Realty Trust (DLR) is a real estate investment trust (REIT) that specializes in carrier-neutral data centers. It provides colocation and peering services, making it a critical player in the data center industry.

DLR's recent business combination with InterXion Holdings, a Netherlands-based information technology services company, is seen as highly complementary. This strategic move is expected to enhance DLR's market position and growth prospects. Additionally, DLR offers a 2.84 percent dividend yield and an 11 percent compound annual growth rate (CAGR), making it an attractive investment.

Bolton is drawn to DLR's strong market position and its potential for growth, bolstered by its strategic acquisitions and robust financial performance. The company's ability to provide essential data center services aligns well with the ongoing digital transformation and AI advancements.

Conclusion

Kim Bolton's investment philosophy emphasizes active management, strategic acquisitions, and a focus on growth stocks with long-term potential. His top picks—Cisco Systems, Western Digital, and Digital Realty Trust—reflect this approach, showcasing companies with strong market positions, innovative products, and promising growth prospects. As we navigate the ever-evolving market landscape, Bolton's insights provide a valuable guide for making informed investment decisions.

Bloomberg

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