Markets closed out May with extraordinary momentum: major U.S. indices recorded headline-grabbing advances and technology names led the charge. But rapid rallies often force active strategies to decide whether to lock in gains or remain exposed to momentum-driven upside.
Our AI-powered ProPicks model made that decision in early June, executing a targeted rotation that realized sizable profits on two prior holdings and recycled that capital into names with what the model judged to be superior risk-reward profiles for the coming months.
What the model sold and why
The strategy exited two technology positions after they delivered outsized returns. Both sales captured more than 40% gains, but each decision was driven by a different mix of technical, valuation and fundamental signals the engine uses in its monthly rebalance.
Asana (NYSE: ASAN) - Realized 43.3%
The model added Asana at $6.33 and removed the position ahead of the June rebalance at $9.07, locking in a 43.3% return. Despite the rally and certain encouraging operating metrics, several factors reduced the stock's attractiveness relative to alternatives in the model's universe.
- Technical momentum lagging: ASAN has been broadly weak over the previous year, trading approximately 57% below its level 12 months earlier and sitting near 40% of its 52-week high.
- Slowing top-line growth: Revenue expansion has cooled to roughly 9% to 10%, a pace the model judged insufficient to justify a premium multiple when compared with faster-growing tech peers.
- Balance-sheet and cash dynamics: Stock-based compensation is currently running at about twice the company's free cash flow. The model also noted a recent $75 million cash acquisition that, combined with the compensation profile, compresses near-term cash metrics.
That said, the model did acknowledge Asana's strengths. The company reported an 88% gross margin, a 43% beat on Q1 earnings, and growing adoption of its AI tools. Those fundamentals supported holding the stock through the rally long enough to capture a large profit - then moving capital where the model saw more compelling upside.
Applied Materials (NASDAQ: AMAT) - Captured 42.5%
The engine purchased Applied Materials at $322.32 and exited at $459.30, a 42.5% realized gain. AMAT had been a standout name amid enthusiasm for AI-related semiconductor capex, but the rebalance found the residual reward to be constrained by valuation and other risk signals.
- Stretched valuation: After an approximately 189% move over the previous 12 months, the stock traded close to its 52-week high. The model flagged an adjusted P/E near 49x and estimated the market price to be roughly 28% above the model's calculated intrinsic value of $324.
- Slower recent growth vs. peers: Trailing 12-month revenue growth was about 3%, with EBITDA up roughly 6% - figures the model considered modest relative to what it was identifying in other AI-related tech segments.
- Regulatory and export uncertainty: A recent $252 million U.S. Department of Justice export-violation settlement and tighter shipment restrictions to China’s Hua Hong introduced an increment of near-term earnings uncertainty that degraded the stock's risk score.
Despite these selling signals, the model recognized AMAT's market position. The company posted record Q2 revenue of $7.91 billion and provided strong guidance, while maintaining a close relationship with major foundry customers such as TSMC. The decision to exit was valuation-driven rather than a judgment on long-term operational strength.
Where the proceeds went - June additions
Proceeds from both exits were promptly redeployed. Rather than hold cash, the model added new high-conviction names that emphasize different return drivers: contract-backed infrastructure cash flow, an attractive yield, and a semiconductor supplier with a conservative balance sheet and low leverage.
Energy Transfer (NYSE: ET) - Infrastructure and yield
The model added Energy Transfer as a core infrastructure pick. Although the market has grown more focused on big-tech narratives, the engine highlighted ET's position as a beneficiary of the power and fuel demands tied to expanding data center footprints.
- Valuation and yield: ET had gained about 20% year-to-date, yet still traded near $19, under analyst targets in the $23 to $24 range. The name carries a roughly 7% dividend yield, appealing to income-focused allocations.
- Recent operating performance: Energy Transfer reported first-quarter 2026 revenue of $27.8 billion, a 32% year-over-year increase, and EBITDA of $4.9 billion, up 20% year-over-year. Management subsequently raised full-year EBITDA guidance by $750 million.
- Contracted cash flows: The company secured over 6 billion cubic feet per day (Bcf/d) of long-term pipeline contracts, which the model expects to generate more than $25 billion in fee revenue, providing predictable cash flow as demand from data centers expands.
- Analyst support: The model recorded that Jefferies and Barclays had recently named ET a top buy, reinforcing the selection signal.
For the model, Energy Transfer represents an infrastructure-exposed complement to the prior tech holdings - trading at what it identified as a deep discount while benefiting from secular demand drivers.
Photronics (NASDAQ: PLAB) - Deep-value semiconductor exposure
Photronics joined the model's high-conviction list as a deep-value semiconductor opportunity underpinned by a strong liquidity position.
- Entry window and recent performance: Following a pullback, PLAB traded near 58% of its 52-week high, presenting what the model assessed as an attractive entry. Over the previous year the stock had still appreciated roughly 94%.
- Valuation and earnings leverage: The stock traded at a P/E of about 12x and a PEG ratio of 0.29, figures the model connected to an inexpensive valuation relative to recovery potential.
- Balance sheet strength: Photronics reported approximately $638 million in cash and near-zero debt - a combination the model favored for funding expansion without leverage-related constraints.
- Capacity expansion: The company is building new production facilities in Texas and South Korea, projects scheduled to begin contributing revenue by late 2026.
- Analyst expectations: The model noted buy ratings with price targets around $42 to $43, implying roughly 30% upside from current levels.
The combination of low leverage, significant cash reserves and imminent capacity additions made Photronics a classic value-with-catalyst selection for the model's June roster.
Other notable momentum winners from May
Several names already held by the model enjoyed pronounced single-month rallies in May. The engine retained or benefited from these moves across various strategies.
- Iridium Communications (NASDAQGS: IRDM): +31.29% in May alone
- HEICO Corporation (NYSE: HEI): +29.75% in May alone; +35.71% since chosen
- IBM (NYSE: IBM): +29.20% in May alone
- Consensus Cloud Solutions (NASDAQGS: CCSI): +25.09% in May alone; +60.81% since chosen
- Teradata (NYSE: TDC): +21.78% in May
- Fair Isaac (NYSE: FICO): +20.77% in May alone
- Alexandria Real Estate Equities (NYSE: ARE): +20.03% in May alone
The model also recorded numerous other double-digit monthly rallies across the strategy set during May.
Performance since launch and process mechanics
Since the AI-driven strategies launched in November 2023, they posted a cumulative return of +216.00%, representing an outperformance of +136.86% versus the benchmark S&P 500. Those returns illustrate the model's approach of rotating out of overextended names into securities the engine judges to offer superior intermediate-term upside.
At the core of the process is a monthly re-evaluation. The system analyzes thousands of global equities using a combination of historical and forward-looking metrics:
- The engine processes more than 15 years of financial data.
- It runs more than 150 quantitative models across that dataset.
- Each month the model identifies up to 20 high-conviction stocks per strategy based on projected medium-term upside potential.
Portfolio construction follows a transparent framework: selected stocks are equally weighted within each strategy, new opportunities replace names that no longer meet the criteria, and positions that continue to score well may be retained. The objective is systematic repositioning of capital toward the most attractive opportunities as measured by the model's multi-factor rubric.
Subscription and member access
For less than $9 a month, premium members receive access to the ProPicks AI strategies. Subscribers can view not only the ticker list but also the specific rationale behind every addition and removal, including the metrics and signals that drove each decision. Members can access the full monthly-updated list of picks and the detailed reasoning that accompanies each change.
Existing members are directed to the full June pick list, while new subscribers are provided the option to join via app or web channels.
Bottom line
The early-June rebalance exemplified a disciplined, valuation-sensitive rotation: profiting from momentum-driven technology rallies while redeploying proceeds into infrastructure exposure with contracted cash flows and a semicapital-equipment supplier that combines a conservative balance sheet with near-term capacity catalysts. The moves reflect a model objective to harvest outsized gains and to place that capital where objective signals indicate a better risk-reward profile.
Investors should note that the model's rebalancing is systematic and monthly; holdings may change as the underlying quantitative signals evolve.