The institutional trading desks are getting surgical with their AI exposure. Instead of going all-in on the entire sector, major players are now deploying what traders call the 'selective scalpel' approach—cherry-picking specific AI plays while avoiding broader index concentration.

This shift reflects a maturing market perspective. Rather than viewing AI as a monolithic trade, Wall Street's strategists are differentiating between sustainable gainers and momentum-driven hype. The strategy involves identifying which AI narratives have real operational edges versus which are priced for perfection.

For those tracking institutional capital flows, this precision targeting signals a recalibration. Expect to see more nuanced rotation patterns as smart money separates signal from noise in the AI trade.