Wall Street strategists are diverging on how much risk is building up in AI-linked stocks. Piper Sandler warned that equity market breadth is weakening, meaning fewer stocks are driving index gains, a pattern the firm flags as a reason for caution on overall equity exposure.
Michael Burry, known for predicting the 2008 subprime mortgage crash, has reportedly taken bets against Nvidia and Palantir, warning of a possible 1987-style drop, according to the Motley Fool. On the other side, BlackRock strategist Gargi Pal Chaudhuri said investors should stay invested in AI but broaden into other themes such as quality and lower-volatility stocks, while also opposing a Federal Reserve interest-rate hike.
The disagreement is a signal that no consensus exists yet on whether AI-related valuations are overextended or simply leading a normal market cycle. None of the sources point to a specific near-term catalyst that would resolve the debate.