Stocks popped last week on the back of Nvdia's (NVDA) stronger-than-expected fourth-quarter results.

Wells Fargo Investment Institute Global Market Strategist Gary Schlossberg argues however that tech stocks may be getting ahead of themselves. "As we've seen with technology in the past, we have had the market run ahead and then go into something of a correction. And the timing and the extent of that correction could depend on what the Federal Reserve does, what the economy does, and for that reason, we are more guarded on technology," Schlossberg explains.

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Editor's note: This article was written by Stephanie Mikulich

Video Transcript

AKIKO FUJITA: You know, at least for the week being, it did feel like given NVIDIA's numbers and the latest numbers in the quarter that a lot of the gains that we have seen in the stock investors could justify. How concerned are you about the froth that's building within the AI space? Or is it froth? Is it justified backed up by the numbers?

GARY SCHLOSSBERG: Well, the market may be getting ahead of itself. Clearly, there are tremendous opportunities in the AI area. But as we've seen with technology in the past, we have had the market run ahead, and then go into something of a correction. And the timing and the extent of that correction could depend on what the Federal Reserve does, what the economy does. And for that reason we're more guarded on technology.

We've pulled back a bit. We're neutral toward that sector of the market. We're more favorable toward energy, health care, industrials, and materials and the like for a variety of reasons. But our big concern is that tech has benefited to some extent by very easy financial conditions, which are becoming less so and could continue to tighten up if in fact, the view on Fed policy turns a bit less sanguine over the next several months.

AKIKO FUJITA: Gary, you mentioned energy is of the positions or one of the sectors you're more favorable in. What do you like specifically there?

GARY SCHLOSSBERG: What we think fundamentally the market is tight. Our real asset strategist John LaForge feels that we're in the beginning or early stages of a commodity supercycle which extends not only to energy but also to other commodities.

And that fundamental tightness means that energy prices we think are biased to the upside both near term and out over the longer term just given certain supply constraints, greater OPEC discipline. And for that reason, we view that sector more as favorably. Of course, a lot depends on the extent of any future global economic slowdown. But at the moment, we think the supply-demand balance favors that sector of the market.