Berkshire Hathaway director Chris Davis believes the current S&P 500 (SP500) is in a “peculiar distortion” characterized by inflated valuations and increasingly narrow market leadership, while financial stocks represent significantly undervalued opportunities.

The Davis Advisors chairman, whose firm manages more than $31 billion in assets, sees the banking sector as positioned for a major revaluation over the coming decade.

Davis specifically highlighted Capital One as “a classic growth stock in disguise,” pointing out that it trades at just nine times earnings despite being one of the largest banks in the country and still led by its founder, Rich Fairbank.

“I don’t know any company that is better positioned for the advent of AI in financial services than Capital One,” he said. “It’s just amazing to me to have those sorts of opportunities in a very expensive market.”

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