Kevin Muir: Why the Smart Money Is Selling AI Stocks

The current market landscape faces a significant shift in equity supply, moving from a long-term trend of share buybacks to a surge in large-scale capital issuance, exemplified by Google’s recent secondary offering and the upcoming SpaceX capital unlock. This influx of supply, combined with the speculative frenzy surrounding AI, suggests a high probability of a bubble. While AI may be a transformative technology, the "pick and shovel" companies building the infrastructure are particularly vulnerable to rapid, deep corrections, as evidenced by the recent semiconductor sell-off. Historical precedents, such as the dot-com era and the collapse of companies like Nortel, demonstrate that even revolutionary technological advancements often lead to poor investment outcomes for those backing the infrastructure builders. Investors should prioritize potential beneficiaries of AI rather than the companies currently driving the capital-intensive build-out.