After several months of sideways trading and a 35-percentage-point underperformance of the iShares AI Innovation ETF relative to the equal-weighted S&P 500, conditions could support a tactical rebound in AI stocks. Hedge funds have sharply reduced their leverage and exposure to technology, while Alphabet, Amazon and Microsoft earnings provide an immediate catalyst. Anthropic’s IPO filing, which shows $100 billion in cash before proceeds are collected, along with Blackstone’s financing for SpaceX and Broadcom’s $63 billion commitment to fund Anthropic chips, ease concerns about AI funding. However, continued retail buying of beaten-down technology stocks, rising bond yields, crude oil above $100 per barrel and tight credit conditions could limit the strength and durability of any rally.
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