How Leverage Turned An AI Boom Into A Crash

How Leverage Turned An AI Boom Into A Crash – Prof G Markets

Market views

Bullish

MSFT— Microsoft has strong AI revenue with 30M+ paid Copilot seats and AWS-like cloud growth at 37%, fastest in 5 years. Despite not having the best AI model, their enterprise distribution advantage and installed base create a massive moat for AI adoption.
AMZN— Amazon showed strong AI revenue growth with AWS up 37% (fastest in 5 years) and plans to double retail revenues by 2033 without incremental hires due to AI and industrial robots. Trading at historically low multiples despite growth trajectory.
AAPL— Apple has the strongest moat in tech through iPhone hardware dominance with no viable substitutes, serving the most valuable 20% of global consumers. Revenue up 16% despite being mature, and disciplined approach to AI spending is being rewarded by markets.
GOOGL— Alphabet has 5,000 operational autonomous vehicles (vs Tesla's 24) and is positioned to benefit from autonomous ride-hailing going parabolic. Was the best big tech performer in 2025 (up 68%) based on their stock pick.
ROBOTICS— AI-powered industrial robots represent a major growth opportunity, particularly for Amazon's warehouse operations, as companies automate to increase productivity without adding headcount.
META— Ed predicts Meta has bottomed at 20x earnings after the post-earnings crash, with all concerns about AI spending and debt now reflected in the price. He bought at the low and sees limited downside from current levels.

Bearish

LEVERAGE— Leveraged ETFs and margin positions are creating systemic risk as AI stocks decline. Multiple forced selling events expected in August as margin calls hit retail and institutional investors who mistook leverage for intelligence.
HYNIX— SK Hynix crashed 40% in South Korea's market crisis, reporting weaker than expected earnings. The stock was heavily owned by retail investors using leveraged ETFs, creating a forced selling cascade.
SSNLF— Samsung fell 32% in South Korea's market crisis as part of the broader chipmaker selloff. Along with SK Hynix, these two stocks make up roughly half of South Korea's market and were at the center of the leveraged ETF crisis.
AIMODELS— AI sentiment is souring with concerns about extreme debt issuance, circular financing, SPV mania, and lack of clear ROI. Chip stocks lost $1 trillion in value despite good earnings as euphoria loses steam.
META— Meta's free cash flow fell 91% to $784M with no clear monetization story for billions in AI spending. Market is questioning whether this is investment or faith-based spending, leading to 8% post-earnings drop.

Not investment advice.