Investor borrowing from brokerages for securities, including AI-related assets, surged over 50% in the last year to a record $1.4 trillion. Assets in high-risk leveraged exchange-traded funds have quadrupled in the past four years, creating a fragile market. A single negative earnings call, particularly regarding semiconductor demand, could trigger a cascade of sell-offs.
Record investor leverage in AI-related assets makes the market highly vulnerable to a sharp correction, even if underlying AI fundamentals remain strong.