Major U.S. indexes opened August in positive territory after a July that left the Dow largely unchanged, the S&P 500 effectively flat, and the Nasdaq carrying the heaviest losses for the month. The tech-heavy Nasdaq fell -3.2% in July as capital flowed out of the earlier year’s market-leading trades. Institutional investors have begun redeploying money into broader sectors; the equal-weighted S&P 500 reached a record high just last week.
Within that shifting market landscape, a subscription-based AI-driven selection service implemented a rotation of holdings at the start of August. The model realized sizable gains on two mid-cap names that experienced strong rallies in July, then redeployed proceeds into a pair of high-conviction picks. The changes reflect a disciplined, rules-based approach: locking in profits when a security’s risk-return profile no longer meets the strategy’s thresholds and redeploying capital into stocks that better match the model’s combined valuation, momentum, and growth filters.
Why the exits were executed
Lincoln National (NYSE: LNC) - The system exited its Lincoln National position to capture a 33.2% gain. That decision followed a roughly 27% one-month surge that brought the stock close to its 52-week high and nearly in line with analyst fair value estimates. Despite the rally, the company reported revenue that missed expectations and annuity outflows of approximately $2.9 billion. Given those fundamentals and the compressed room for upside, the model deemed the risk-return trade-off unattractive and locked in the profit to redeploy capital.
International Seaways (NYSE: INSW) - The strategy also removed International Seaways after a 28.7% gain. The shipping company had run about 170% over the prior year and reached an all-time high, trading above its analyst fair value. The model noted a stretched 2.2x price-to-book ratio supported by elevated tanker rates that may not be sustainable, prompting a disciplined profit-taking exit from a cyclical peak.
Where the proceeds went: August additions
The AI engine did not hold cash after these exits. Proceeds were immediately redeployed into new positions that met the model’s criteria for valuation, profitability, and growth momentum. Two notable additions for August are HP Inc. and Lockheed Martin.
HP Inc. (NYSE: HPQ) - The model added HP based on a convergence of attractive valuation and momentum, along with accelerating top-line growth and AI-related catalysts. Over the prior six months the stock had risen roughly 44%, yet it still traded at about 10x earnings and below the model’s fair value estimate of approximately $33.50, implying upside from a recent price near $27.
HP’s second-quarter results showed revenue of $14.4 billion, up 9% year-over-year, while earnings per share increased by more than 20%. Management raised its full-year guidance following these results. The model also factored in HP’s strategic engagement with OpenAI, participation in Nvidia’s next-generation AI PC ecosystem, and the company’s 4.4% dividend yield supported by 15 consecutive years of increases. Those elements combined into a value-plus-momentum thesis that justified adding the stock.
Lockheed Martin (NYSE: LMT) - The model added Lockheed Martin for reasons centered on strong market momentum, expanding growth, and a highly constructive financial profile. The stock had gained about 42% over the past year and analysts’ targets suggested additional upside from current trading levels near $574. The company reported a record backlog of $230 billion at quarter end; second-quarter revenue rose 11% while EBITDA expanded roughly 34% year-over-year.
Lockheed’s Q2 performance was driven by major contract awards, including a $58.6 billion PAC-3 missile contract and a $35 billion THAAD contract, alongside an exceptional 3.2x book-to-bill ratio. Free cash flow reached $2.9 billion in Q2, supporting a long record of dividend increases—23 consecutive years—and reinforcing the company’s capacity for durable cash returns.
Other July standouts and model performance
The two mid-cap exits were not isolated cases. Several additional names flagged by the AI strategies delivered double-digit monthly returns in July, with a subset producing more than 30% gains for the month. Reported results for July include:
- Everforth (NYSE: EFOR): +62.07% in July alone
- PBF Energy (NYSE: PBF): +50.46% in July alone (+72.79% since picked)
- Bausch Health (NYSE: BHC): +44.44% in July alone
- Dorian LPG Ltd (NYSE: LPG): +37.97% in July alone
- Tenet Healthcare (NYSE: THC): +33.25% in July alone
- Kosmos Energy (NYSE: KOS): +32.51% in July alone
Across the model’s tech-focused strategies, aggregate performance since the AI rollout in November 2023 is reported at +188.66%, an outperformance of +109.24% versus the S&P 500 benchmark over the same period. These figures are presented as recorded since the official launch of the AI models in November 2023.
How the stock picker operates
The model evaluates thousands of global equities at the start of each month. It uses a combination of historical financial data, valuation signals, and forward-looking growth metrics processed through more than 150 quantitative models and over 15 years of financial history. From that universe, the system identifies up to 20 high-conviction stocks per strategy based on projected medium-term upside potential.
Each month, strategies are rebalanced: new opportunities are added, strong performers may be retained, and names that no longer meet the selection criteria are removed. The approach applies equal weighting across selected stocks to provide a transparent benchmark for tracking model performance, though individual investors may choose to allocate differently. The stated objective is systematic capital repositioning toward what the model assesses as the strongest opportunities as market conditions change.
Subscription and access
The service described is offered to subscribers. The article references a monthly price point of under $8 for premium members accessing the AI-powered picks, and notes promotional pricing available at the time of publication for new subscribers. Subscribers obtain not only the tickers but also the rationale behind every monthly addition and removal, enabling review of the model’s decisions before broader market reactions.
Bottom line
The AI-driven rotation into August reflects a disciplined approach to profit-taking and redeployment. By locking in outsized July gains on mid-cap winners, the model freed capital to enter a deep-value technology play benefiting from AI momentum and a defense contractor with a sizable backlog and robust cash flows. The process emphasizes rule-based exits and monthly rebalancing informed by an extensive quantitative framework.
Note: Subscription pricing and promotional offers cited were accurate at the time of publication and may vary by region.