When Everyone Believes in AI: These Nine Images Reveal the "Underlying Concerns"

After several days of selling, almost everyone from Wall Street to ordinary investors is making a strong case for AI, and their arguments are very convincing.

However, multiple indicators show that current AI investments have reached extreme levels. The holdings of large growth and technology stocks have returned to multi-quarter highs, and the preferred stocks of hedge funds have converged with those of retail speculators. More concerning is that household stock exposure has hit a historic high; if AI technology valuations crack, the wealth effect alone could drag U.S. GDP down by 2.9%.

Mag 7 Options Skew Remains at Historical Highs

The options skew of large tech stocks has reached the 91st percentile. LSEG data shows that since May 2012, the 3-month 25 delta call option skew of the Magnificent 7 (Mag 7) has been at historical highs, reflecting extreme optimism among investors regarding price increases.

Significant Rebound in Tech Stock Holdings

Deutsche Bank data further confirms this trend. The holdings of large growth and technology stocks have returned to multi-quarter highs, indicating a significant influx of capital into this sector.

Hedge Funds and Retail Investors Are Indistinguishable

Most notably, there has been a change in hedge fund behavior. Empirical Research Partners points out that fundamental hedge funds have "embraced high-beta stocks," namely the large tech AI darlings. In other words, the preferred stocks of hedge funds have become indistinguishable from those of retail speculators, with professional investment and speculative funds crowded onto the same track.

Is a Dip Healthier?

Historical data shows that AI-related stocks have previously experienced significant pullbacks relative to the market, followed by capital buying on dips. Goldman Sachs' analysis indicates that AI investments are not a myth of only rising without falling.

Record Risk Exposure

More seriously, there is a record risk exposure to the overall economy. Household stock allocations have reached record levels, and estimates from The Economist suggest that if AI technology valuations crack, the impact on consumption through the wealth effect alone could drag GDP down by 2.9%. The U.S. economy's dependence on AI has reached a dangerous level

Systemic Risk Intensifies

The concentration of industries is also concerning. Data from CB Insights shows that NVIDIA supports almost every major AI player, except for Anthropic. This highly concentrated supply chain structure amplifies systemic risk.

History Always Repeats Itself

Comparative analysis from Top Down Charts reveals an "incredible chart"—the current situation is highly similar to historical bubble periods. Such extreme scenarios typically do not end well.

Market Narrative Takes a Sharp Turn

The rapid shift in market narrative is also worth noting. The change from "search is dying" to "Google is actually the AI leader" reflects the instability of market sentiment with a 180-degree turn in a very short time.

Credit Risk Soars

Finally, credit risk indicators are diverging. Credit risk in the tech industry has surged sharply, while the banking sector remains relatively calm. Although there are specific reasons for this and it cannot simply be generalized that "credit always leads," this phenomenon still requires close attention.

When everyone believes the same story, the market is often brewing a turning point.

Risk Warning and Disclaimer

The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk