AI Scare Spreads as Staples and Semiconductors Spike

A rotation out of U.S. risk is gathering pace as policy uncertainty drive investors toward defensives and selective global winners.

Key Takeaways

• Global Rotation Meets AI-Driven Risk: Asian tech hardware remains resilient, while U.S. Tech, crypto, and private-credit-linked assets are in a sharper correction tied to the “AI scare trade” and the unwinding of the “Trump trade.”

• Late-Cycle Dynamics Are Gaining Speed: Credit risk repricing (including private credit/private equity stress) is starting to spill into Financials, while Consumer Staples are gaining a defensive “safe asset” premium as investors rotate away from frothier growth themes.

• The Tech Disruption Risk Is Real: The software sell-off may be excessive in some names, but broader Tech valuations still face pressure from competition, self-cannibalizing capex, bottlenecks, and uncertain returns on AI infrastructure.