THE MARKET IS QUIETLY ROTATING OUT OF TECH AND AI STOCKS.
The Dow just hit an all-time high while the Nasdaq is down 3.13% today.
Information Technology is down 2.37%. Meanwhile Healthcare is up 2.31%, Consumer Staples up 2.39%, Utilities up 1.83%, and Financials up 1.13%.
Three things are driving this rotation.
First, investors are moving toward sectors with steady earnings and dividends over sectors built on future growth promises.
Second, major banks and hedge funds have been issuing warnings about AI valuations for weeks.
China's top hedge funds called it a "super bubble." The IMF flagged speculative excess. Michael Burry opened short positions on Nvidia, SOXX, and Applied Materials.
Third, and most importantly, the market is starting to question the return on AI spending.
The five biggest hyperscalers are spending $741 billion on AI infrastructure this year alone. But the revenue being generated from that spending still doesn't justify the scale of investment.
The market is seeing the capex go in but not seeing proportionate output come out.
The Dow hitting all-time highs while the Nasdaq dumps is the market telling you exactly what it believes right now.
Certainty over growth and Earnings over promises.
The Dow just hit an all-time high while the Nasdaq is down 3.13% today.
Information Technology is down 2.37%. Meanwhile Healthcare is up 2.31%, Consumer Staples up 2.39%, Utilities up 1.83%, and Financials up 1.13%.
Three things are driving this rotation.
First, investors are moving toward sectors with steady earnings and dividends over sectors built on future growth promises.
Second, major banks and hedge funds have been issuing warnings about AI valuations for weeks.
China's top hedge funds called it a "super bubble." The IMF flagged speculative excess. Michael Burry opened short positions on Nvidia, SOXX, and Applied Materials.
Third, and most importantly, the market is starting to question the return on AI spending.
The five biggest hyperscalers are spending $741 billion on AI infrastructure this year alone. But the revenue being generated from that spending still doesn't justify the scale of investment.
The market is seeing the capex go in but not seeing proportionate output come out.
The Dow hitting all-time highs while the Nasdaq dumps is the market telling you exactly what it believes right now.
Certainty over growth and Earnings over promises.