# Why one CIO is pumping the brakes on the AI trade-and shifting to Europe > Hirtle Callaghan's Brad Conger is easing off the AI trade-keep exposure, trim concentration, demand proof on unit economics. He prefers Europe on valuation and steadier earnings. - Type: AI news - Page: https://completeaitraining.com/news/why-one-cio-is-pumping-the-brakes-on-the-ai-trade-and/ - Published: 2025-11-10 - Updated: 2025-11-10 - Author: Jeroen Erne - Jobs: Finance - Reading time: 2 min ### Why this strategist is getting cautious on the AI trade AI has driven a big chunk of equity returns over the past year. Yet Hirtle Callaghan CIO Brad Conger is tapping the brakes. His stance: keep exposure, but scale it back. The reason is simple-too many open questions, too much perfection baked into prices. #### The case for caution AI is still sorting out its winning business models. Who captures the economics-model providers, hyperscalers, chipmakers, or software firms that bundle AI as a feature? Where the compute happens (centralized vs. edge) changes the margin structure and who keeps the dollars. At current prices, the market feels like it's underwriting multi-trillion revenue runways with very little friction. That can work-until it doesn't. If the next wave of models delivers less uplift than expected, or if open-source breakthroughs (think DeepSeek-style leaps) reset costs and pricing, momentum can stall fast. #### What could crack the story - Model progress slows: future iterations (e.g., a hypothetical "GPT-6") don't deliver step-change gains. - Open-source compression: community models improve, costs fall, and premium pricing gets harder. - Capital intensity: capex outpaces monetization, dragging returns on invested capital. - Unit economics: inference costs stay high while customers treat AI as a bundled feature, not a budget line. - Data constraints or regulation increase friction and timelines. #### Positioning: trim, don't torch Conger's team is underweight the AI complex and mega-caps. If AI-related names plus the [Magnificent Seven](https://www.investopedia.com/terms/m/magnificent-7-stocks.asp?ref=completeaitraining.com) sit near 40% of the market, they run closer to 27-28%. That's a clear tilt without taking career-risk extremes. You keep core exposure and cut the concentration risk. - Set position caps and pre-plan trims into strength. - Favor cash flow yield and balance-sheet quality over pure narrative beta. - Use options or pair trades to hedge the fattest tails. #### Where to be overweight: Europe on valuation His offset is Europe. The valuation gap vs. the U.S. is wide by historical standards. Europe doesn't need U.S.-style multiples; it just needs "less bad" plus stable earnings. Recent prints have been solid, which helps sentiment and the multiple. - Focus on quality cyclicals, select financials with capital return, and industrials with backlog visibility. - Mind FX: decide whether to hedge EUR/GBP based on your base currency and policy. - Simple vehicles: the [MSCI Europe Index](https://www.msci.com/our-solutions/indexes/msci-europe-index?ref=completeaitraining.com) or a STOXX 600 tracker; layer active sleeves for idiosyncratic alpha. #### What to watch next quarter - Hyperscaler capex guides vs. AI service revenue attribution. - Unit economics: inference cost per query, gross margin trend on AI workloads, and payback periods. - GPU supply/demand, lead times, and pricing. - Model efficiency benchmarks and any plateauing in real-world uplift. - Earnings breadth and revisions in Europe; any narrowing of the U.S.-EU multiple gap. #### Practical notes for finance teams Treat AI like a product investment. Define the job to be done, run time-boxed pilots, measure cash impact, and sunset what doesn't clear hurdle rates. Beware vendor lock-in; keep optionality across providers. - Set a simple ROI scorecard: adoption, time saved, error rates, gross margin effect. - Standardize data access and prompts; audit outputs before scaling. - Keep contracts short and modular until the economics are proven. If you're evaluating tools for FP&A, audit, or research workflows, this curated list can save time: [AI tools for finance](https://completeaitraining.com/ai-tools/10b-ai-tools-for-finance/). #### Bottom line The AI story is real, but expectations are doing a lot of heavy lifting. Conger's playbook-dial down concentration, add Europe on valuation, and demand proof on unit economics-is a sensible way to keep upside while respecting risk. In markets like this, sizing beats heroics. --- This is the Markdown form of https://completeaitraining.com/news/why-one-cio-is-pumping-the-brakes-on-the-ai-trade-and/. The whole site is mapped at https://completeaitraining.com/llms.txt.