The recent pullback in AI shares stung typical investors - yet it created a timely opening for contrarian income seekers.

AI leader NVIDIA (NVDA) slipped 8.5% over the week. Other names suffered larger declines: Micron Technology (MU), for instance, lost 16.6%.

The outcome? An opening for us to acquire favored AI-oriented dividend funds at reduced prices - beginning with one newly attractive all-in-one holding from the lineup of my CEF Insider service.

That holding is the Columbia Seligman Premium Technology Growth Fund (STK), which owns major AI names such as Microsoft (MSFT), NVIDIA and Alphabet (GOOGL), plus AI-infrastructure holdings like Lam Research (LRCX) and Bloom Energy (BE).

STK draws our attention now because the fund trades at a 4.6% discount to net asset value (NAV, or the worth of its underlying holdings), after averaging a 2.3% premium across the past decade.

And when I note this one is suddenly available at a lower price, I mean it:

STK's Quick (and Probably Short-Lived) Move Into Discount Territory

That marks a sizable shift for a fund that has delivered a solid 42.8% return since we included it in our lineup in the November edition. I view that performance as merely the beginning - and STK's move to discount status as a short pause we intend to use. Here is why.

Investors Exit Because the Economy Is ... Too Robust?

In truth, this latest market decline was not what most observers assumed. The cause behind it is, honestly, unusual: The economy is too robust.

The decline followed the newest jobs data, which revealed the US added 172,000 positions in May, nearly twice what economists had forecast.

The reasoning runs like this: If growth is accelerating, the Fed may raise rates. Stocks therefore declined because higher rates pressure earnings. Technology shares are especially sensitive to rate moves.

This reasoning appears simple. Yet several issues exist with the view.

First, expectations for a rate reduction had already faded before the jobs data arrived. In fact, discussion of a possible rate increase had already surfaced. Overall, the rate outlook shifted little after the report, so its impact on the broader picture stayed modest.

Why, then, did stocks - especially tech stocks - retreat? The reason is direct: Investors simply booked gains after the market's strong advance, especially since late March.

They acted together for the same cause. With the strong jobs report, a fresh story is forming in coverage: Rates will climb, and shares may weaken. That fuels uncertainty and, therefore, greater swings. Selling into the pattern lets holders secure gains.

Yet the sharpest of these holders also trimmed positions (and tech holdings in particular) for a purpose that matters more to us: so they hold cash ready to deploy when the market turns overly fearful, as it routinely does.

These astute holders recognize (as do we) that we have witnessed this pattern before - not only historically, but within recent months.

On February 22, a firm called Citrini Research issued a note on Substack flagging a coming economic drop tied to AI.

Investors used the concern from that note to book gains as well. Yet that move proved brief: All of these shares had fully rebounded by early April. They likely would have recovered sooner if the Iran conflict had not started on February 27.

So we face a case of history repeating. But history never repeats in identical form.

Here is the difference: The February drop rested on Citrini's outlook that over the next two years, firms would see profits rise sharply as machines replaced office roles. Unemployment would climb because of AI.

In short, one Substack note sufficed to prompt selling and profit-taking then. We face a similar moment now, but for the reverse cause: Investors are selling because AI is adding jobs.

We have already heard many economists argue that AI will generate more positions, not fewer, as Apollo Global Management Chief Economist Torsten Slok stated.

Back in May - before the strong employment report - Slok also observed there is zero sign of AI-linked job cuts and soon after recorded the rise in new US firms formed partly because of AI.

This stance is not novel. Goldman Sachs offered the same case in 2023; MIT professor David Autor echoed it in 2024; and Stanford economics professor Erik Brynjolfsson repeated it in 2025.

Dozens of further cases exist, but I will skip the full list.

That is why we are eyeing CEFs like the newly inexpensive STK today. Buying now secures the fund's (well supported) 3.6% yield and positions us for another round of gains once typical investors recognize the error and push these AI shares higher again.

This approach - moving into CEFs when they are oversold and exiting when they are overbought - lies at the core of our CEF Insider approach, and a reliable path to wealth over time. And even if we must wait for the next rise in our holdings, that is acceptable, because we receive a steady income stream in the meantime.

These 10% Payers Stand Ready for AI's NEXT Phase - and They Trade Cheap (for Now)

Other leading AI CEFs have seen their discounts expand in recent weeks as well, and many of these funds deliver higher yields than STK.

In fact, the four funds I am highlighting now yield a solid 10% on average. They not only give us exposure to the Microsofts and NVIDIAs of the AI space at a discount - they also target other non-tech firms set to benefit from AI.

One of these funds, for example, owns the most forward-thinking pharmaceutical companies.

As AI moves through drug development, it will shorten timelines, granting these firms extra years of sales on their top products before patents end.

We are discussing billions in added revenue - yet our 13% (!) paying pharma fund stays overlooked, trading at a striking 9.7% discount as I write this.

The pattern holds at our other three funds, all positioned to benefit from the coming shifts in the economy as AI drives growth in unexpected areas.

Visit our platform for additional details on these four funds yielding around 10% on average, including how each may advance with the continuing AI expansion. You will also receive a free Special Report listing their names and symbols.

Further STK Research:

Warren Buffett Dividend Stocks
Dividend Growth Stocks: 25 Aristocrats
Future Dividend Aristocrats: Close Contenders

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.