For the most part, he thinks future upside is already priced into AI stocks, which makes him less than optimistic about forward returns. Two things in particular make him wary that some of the most prominent AI stocks can live up to the hype. With the largest companies in the market focused on AI, stocks have become historically expensive, Arnott said. The two best deals that he sees right now are small-cap value stocks and emerging market value stocks. Relevant examples include the Vanguard Small-Cap Value ETF (VBR) and the iShares MSCI Emerging Markets Value Factor ETF (EVLU).