Sevens Report’s Tyler Richey: AI Stock Stumble Signals Bearish Exhaustion
Mega-cap tech weakness poses broader risks to equity markets
AI stock boom starts to stumble as investors increase bets against sector
A recent stumble in AI-related stocks “highlights some degree of bearish exhaustion in the underlying AI narrative,” said Tyler Richey, co-editor at Sevens Report Research.
“There are signs the market is turning on AI stocks,” Richey warned, adding that a meaningful and lasting rethinking by investors could pose significant risks for the broader equity market. The concern stems from the heavy concentration of mega-cap tech stocks such as NVIDIA, Microsoft, and Meta within the S&P 500 and other major indexes.
“This could be extremely detrimental to even the most vanilla index strategies,” Richey said. With a record amount of U.S. personal wealth tied to equities, a major AI-driven drawdown could create a negative wealth effect, fueling a bear market in stocks and risk assets while pushing investors toward safe havens amid a weakening economy.
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