The AI Trap
From crowded to crushed
The AI trade has gone from crowded to crushed, and the positioning reset is becoming extreme. Goldman highlights a massive $19 billion futures squeeze, while semiconductor allocations have collapsed toward year lows. Nvidia is trading at its most oversold levels since 2019, and JPM's Asian positioning indicator has plunged to the 8th percentile. Valuations are starting to look compelling, but technical damage remains severe. The ingredients for a violent squeeze are falling into place. Whether that turns into a sustainable recovery is an entirely different question.