Remember when AI was going to make us all rich? Yeah, about that. Wall Street is currently having what can only be described as an existential crisis, and it’s spreading faster than gossip at a high school reunion.
The tech sector is getting absolutely demolished right now. Between Anthropic’s latest AI updates making everyone question their job security and some apocalyptic research note from Citrini that basically said “AI will eat everything,” investors are running around like their portfolios are on fire. Even Nvidia’s stellar earnings couldn’t calm anyone down – which tells you just how spooked everyone is.
I talked to three market pros to figure out where this AI panic attack is headed next, and honestly? Nowhere is safe.
Private Credit: The Ticking Time Bomb
First up: private credit, which one analyst colorfully called a “death bomb.” Basically, all these AI companies have been borrowing massive amounts of money to build their digital empires, and now lenders are getting nervous. Oracle’s already struggling to raise capital for their spending spree, and that’s just the beginning.
The whole Blue Owl Capital situation has everyone comparing this to 2007 – you know, right before everything went sideways. When Jamie Dimon and Mohamed El-Erian start making 2008 comparisons, it’s time to pay attention.
Big Banks: Not So Safe After All
Speaking of banks, they’re not exactly sitting pretty either. Sure, they’re not lending directly to every AI startup with a PowerPoint deck, but they’ve been gorging themselves on private credit deals and leveraged loans. Plus, banks themselves are prime targets for AI disruption – turns out algorithms are pretty good at the whole “moving money around” thing.
One portfolio manager pointed out that bank valuations have gotten pretty stretched during these “very favorable” times. Translation: they might be due for a reality check.
Physical AI: Coming for Your Factory Job
Here’s where it gets really interesting. While everyone’s freaking out about ChatGPT writing emails, physical AI – think robots that actually do stuff in the real world – is quietly preparing to revolutionize entire industries.
Citi thinks warehouse automation alone will be worth $112 billion by 2029. That’s a lot of robots moving boxes around. The industrials and transport sectors could see some serious disruption, which is ironic since investors have been rotating into these “safe” cyclical plays to escape tech volatility.
Software: Still Falling
As for software companies, well, they’re still getting hammered. The prediction? Smaller, feature-specific companies that rode the SaaS wave are probably going to get consolidated or just disappear entirely. If you don’t have a data moat or aren’t part of a bigger platform, you might want to update that resume.
The bottom line? This AI panic isn’t just about tech stocks anymore. It’s spreading through private credit, traditional banks, industrial companies, and pretty much everywhere else. The market is basically playing a giant game of “the floor is AI disruption,” and everyone’s trying to find somewhere safe to stand.
Spoiler alert: there might not be anywhere completely safe. But hey, at least the robots will be really good at managing our portfolios when they take over.