The AI Trade Is Cracking | Peter Boockvar on What to Own Instead

The AI trade is approaching a "peak CapEx" inflection point, creating significant risks for a market heavily reliant on data center build-outs and semiconductor demand. Peter Boockvar, CIO at BFG Wealth Partners, highlights that current earnings growth is disproportionately driven by AI-related infrastructure, leading to a fragile, binary market environment. Investors are already beginning to price in a slowdown, as evidenced by the recent volatility in semiconductor stocks and rising default risks in private credit. The Federal Reserve is likely operating in a "tweaking" cycle, with future policy decisions increasingly sensitive to market stability and the financial health of AI-dependent entities. Amidst these domestic uncertainties, international markets—particularly those with higher dividend yields and lower valuations in non-AI sectors like consumer staples and industrials—provide essential diversification and potential for outperformance as AI-driven dollar strength potentially wanes.