The frenzy in A.I.-related assets has crested, with the most speculative parts of the theme facing mounting selling pressure. Many of these stocks (and related bonds) are vulnerable to a deep shakeout, as investors revise down unrealistic expectations.
Last November we published a list of “10 Potential Catalysts That Could Deflate The A.I. Bubble”. Many items on the list have become problematic (highlighted in red). Ominously, a shock to one segment of the A.I. ecosystem can cause contagion to other components given the circular relationships that exist within it.
A just-published report highlighted how the deflating A.I. bubble would impact a growing range of equity sectors and asset markets, generating a number of long and short investment opportunities as a result of the reckoning in A.I.
