AI Portfolio Constructor

Analysis Date: December 7, 2025

Holdings: 6 stocks

This portfolio was constructed for a moderate risk, mid-term investor using a quality-focused approach with sector diversification. **Selection Criteria:** - Prioritized stocks with risk scores of 3 (moderate risk) to balance growth and stability - Required fundamentals scores of 4-5 (excellent) for core positions, 3+ for all holdings - Emphasized companies with strong cash flow generation and proven business models - Considered recent price action to identify quality companies at reasonable valuations **Portfolio Composition:** - **Technology Core (70%)**: GOOGL, AAPL, MCHP, ANET, AMD provide growth exposure to secular trends (AI, cloud, semiconductors) while maintaining quality fundamentals - **Defensive Balance (10%)**: KVUE adds consumer staples diversification to reduce portfolio volatility - **Sector Mix**: Software/Internet (42%), Semiconductors (31%), Networking (17%), Consumer Products (10%) **Risk Management:** - Avoided high-risk stocks (risk score ≤2) with fundamental concerns or extreme volatility - Excluded companies with poor fundamentals (score ≤2) regardless of momentum - Limited individual positions to 10-22% for proper diversification - Balanced growth (AMD, GOOGL) with stability (AAPL, MCHP, KVUE) **Mid-Term Positioning:** - Companies selected have 1-3 year catalysts: AI adoption, cloud growth, merger synergies - Mix of momentum (GOOGL +42%, AMD +37%) and value opportunities (ANET -14% pullback) - Focus on sustainable competitive advantages and recurring revenue models - Quality businesses that can weather market volatility over 12-36 month horizon This portfolio targets 12-18% annual returns with moderate volatility, appropriate for investors seeking growth while managing downside risk.

Analysis Date: December 7, 2025

Holdings: 6 stocks

This portfolio is constructed for a moderate risk, mid-term investor using a quality-focused, diversified approach: **Selection Methodology:** 1. **Risk Filtering**: Prioritized stocks with risk scores of 3 (moderate) to balance growth with stability. Included two stocks with risk score 2 (AMD, KVUE) at lower weights due to strong fundamentals or defensive characteristics. 2. **Fundamental Quality**: Emphasized fundamentals scores of 4-5, focusing on companies with strong cash generation, solid balance sheets, and proven business models. GOOGL and AAPL (both 5/5 fundamentals) form the core at 42% combined. 3. **Diversification Strategy**: - **Sector Mix**: Technology (77% - GOOGL, AAPL, ANET, MCHP, AMD), Consumer Defensive (8% - KVUE), Healthcare (15% - KVUE) - **Sub-sector Balance**: Cloud/Search (GOOGL), Consumer Electronics (AAPL), Networking (ANET), Semiconductors (MCHP, AMD), Consumer Staples (KVUE) - **Growth vs. Stability**: 42% in mega-cap defensive tech (GOOGL, AAPL), 50% in growth-oriented tech (ANET, MCHP, AMD), 8% in consumer defensive 4. **Weight Allocation Logic**: - **Highest weights (20-22%)**: GOOGL and AAPL - exceptional fundamentals (5/5), moderate risk (3/5), strong momentum, fortress balance sheets - **Mid weights (15-18%)**: ANET, MCHP, AMD - strong fundamentals (4/5), attractive risk/reward, diversified tech exposure - **Lower weight (8%)**: KVUE - defensive diversifier but higher execution risk from merger 5. **Mid-Term Optimization**: - Avoided extreme cyclicals (ALB, APA) and turnaround stories (INTC, DELL) - Focused on companies with visible 12-24 month catalysts: AI growth (GOOGL, AMD), cloud expansion (GOOGL, ANET), product cycles (AAPL, MCHP) - Balanced momentum stocks (GOOGL +42%, AMD +37%) with value opportunities (ANET -14% pullback) 6. **Risk Management**: - No single position >22% ensures diversification - Mix of established leaders (GOOGL, AAPL) with growth names (ANET, AMD) balances stability and upside - Consumer defensive position (KVUE) provides portfolio ballast - Avoided high-risk categories: biotech (MRNA, DXCM), crypto (COIN), distressed names (CMG, FI) **Portfolio Characteristics:** - **Expected Risk**: Moderate - balanced between mega-cap stability and mid-cap growth - **Growth Profile**: Moderate to high - leveraging secular trends (AI, cloud, semiconductors) - **Income**: Limited dividends but strong cash flow generation across holdings - **Time Horizon Fit**: 12-24 months allows tech investments to compound while merger catalysts (KVUE) materialize This portfolio balances quality fundamentals with reasonable valuations, emphasizes companies with clear competitive advantages, and maintains appropriate diversification for a moderate-risk investor with a mid-term investment horizon.