Something shifted on Wall Street, and the receipts are in the CFTC data. Between mid-January and February 10, investors pulled more than $7 billion from Nasdaq 100 futures — the biggest position cut since spring 2025. Short interest jumped $3 billion. Long positions were systematically trimmed. The Nasdaq Composite just logged its fifth consecutive weekly decline, the longest losing streak since 2022.
The culprit isn’t interest rates or earnings misses. It’s AI — but not in the way you’d expect. The market has flipped from treating artificial intelligence as a universal tailwind to pricing it as a sector-specific wrecking ball. In just the past week, AI disruption fears hammered trucking stocks, media companies, office real estate, and SaaS names with distant cash flows. The S&P 500 and Nasdaq both broke below their 50-day moving averages, triggering automated sell programs that amplified the damage.
What’s happening isn’t a broad selloff — it’s a rotation with teeth. While software names get crushed on fears that tools like AI coding agents will destroy seat-based licensing models, other sectors are quietly rallying. Utilities, defense, and M&A targets (hello, ZIM and Masimo) are finding bids. Gold miners are up 37% on the year. The VIX is camped near 21, elevated enough to signal real anxiety but not panic.
Morgan Stanley’s Michael Wilson frames this as “normal for major investment cycles” — the kind of messy repricing that happens when a technology goes from concept to implementation. His team argues that job displacement fears could actually translate into better profit margins as companies automate. But Wilson admits faster-than-expected AI progress poses real risks, and sector leadership could shift faster than anyone’s models predict.
For traders, the positioning data tells a clear story: the crowd is getting defensive on tech, and there’s room for a violent snap-back if sentiment shifts. A $7 billion short position is a lot of dry powder waiting to chase the next positive headline. This week’s FOMC minutes, GDP revision, and PCE inflation data will determine whether that reversal comes now — or whether the Nasdaq’s pain has further to run.