Well, That didnt take long. The AI trade may be in trouble Nov 1 2026

AI Up in Smoke? 

Don’t say I didn’t warn you. Many times, actually.

I am talking about the artificial intelligence trade (AI) and the hype surrounding it. In the last half a year or so, the hottest trade going has had its fair share of fits, starts and stops.

Ending its nearly straight up trajectory of the past two years, in recent months, we have seen heart pounding up days followed by heartbreaking selloffs. Last Friday featured another harrowing selloff, set in motion by less than stellar earnings posted by chip maker Intel.

The subsequent bowling pins hit many of the AI chip stocks hard. I had mentioned a few months back that the bipolar up and down movements of the AI stocks that we witnessed may have signaled what in trading circles is called a “climax top”.

Climax tops are when certain stocks move uncharacteristically up and down by a greater percentage than what historically is regarded as normal. That volatile action can signal a change is coming.

The amount of money going into the AI trade added to the amount of money spent by companies on their AI infrastructure has been massive to say the least. Literally hundreds of billions of dollars have been spent both by companies and investors in anticipation of the hottest mechanism in communication since the telephone.

The jury is out on whether the demand can be met on the supply side and if the investment will have a return in profits for those companies paying out all those billions for AI.

This analyst doubts that there will be enough money made on AI to pay for all the investment that companies have paid out. Additionally, as covered in a previous Money Matters article, the hundreds of billions of dollars spent on AI by companies will have to be passed on to those that buy their products, and that means you and I. In my opinion, AI costs will likely add a healthy percentage to consumer prices that are already skyrocketing from our current inflation.

Right now, investors in the AI trade are bleeding very red from the recent selloff and there’s no telling when it will stop or how low AI stock prices will fall.

Selloffs after extreme run ups can be surprisingly violent. An old Wall Street adage says stocks can rise a lot faster or fall a lot lower than one might think.

AI traders, be careful out there.

“Watching the markets so you don’t have to”

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(As mentioned, please use the below disclaimer exactly) THANKS   (Regulations)   This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License OL34249.

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