Technical indicators point to a continuation of the downtrend for artificial intelligence stocks, despite a recent short-term price recovery.
Katie Stockton of Fairlead Research argues that the current rally is misleading and advises investors to reduce exposure to the sector, citing chart patterns that signal further depreciation ahead.
The warning comes as the AI investment cycle faces mounting headwinds.
The volume of capital raises within the sector is increasingly outpacing investor demand, creating a supply-demand imbalance that threatens to weigh on valuations.
This structural pressure suggests that the recent price bounce may be a temporary reprieve rather than a reversal of the broader trend.
Market concentration risks are also intensifying.