Everyone talks about the AI bubble like its just a tech thing. Nvidia down 20% and people think grab your popcorn. But this isnt 2000 where the damage stayed in Nasdaq stocks with no earnings.
The scale is different now. AI capex is bigger than anything weve seen. Microsoft alone is spending more on data centres in a year than the entire dot-com boom spent. And the money isnt just coming from tech companies. Its coming from pension funds, sovereign wealth funds, insurance companies. The same money that sits in the S&P 500.
When this unwinds, it wont be a sector rotation. It will be a margin call on the whole market. The Mag Seven stocks are 35% of the S&P. If they drop 50%, the index drops 17%. That triggers forced selling everywhere. Funds have to meet redemptions. They sell Coca-Cola to cover Apple. They sell J&J to cover Microsoft. Everything goes down together.
Retail cant short this. You need the size and the timing. The pros will be fine. They have the infrastructure. But a guy with a trading app trying to time the top of an AI hype cycle? Thats a mug's game.
The real play is to do nothing now. Sit on cash. Watch the bloodbath. Then buy the non-tech stuff that got dragged down for no reason. Utilities, consumer staples, healthcare. The stuff that still works when the AI dream dies. Buy it at a discount because the whole market panicked.
Thats the move. Wait for the crash, then buy the boring stuff cheap.
Paul