Max Kettner, HSBC’s London-based chief multi-asset strategist, is urging retail investors pursuing the artificial-intelligence trade to treat it as a short-term, tactical market rather than a set-it-and-forget-it investment. He said market moves have increasingly been driven by technical signals, investor positioning and leverage, sometimes overwhelming a fundamental view that was intended to play out over several months.
Kettner pointed to the recent swings in semiconductor shares as evidence of the change in pace. Asian chip stocks had fallen about 40% and U.S. Names about 30% before the sector rebounded more than 25% and then turned lower again within roughly three months. The iShares Semiconductor ETF was still up 69% for the year, but had fallen more than 10% in October and recorded a nine-session losing streak, its longest since May 2006.
For investors who remain exposed to the sector, Kettner said disciplined risk management is more important than simply holding a bullish view on AI for a year. He advocated taking profits and using tight stop-loss orders, while warning that a sharp move against a position could produce a 15% to 20% drawdown. He also linked the faster market tempo since the COVID period to greater use of leverage, which can magnify gains and losses.
HSBC’s preference has shifted toward equal-weight exposure to the S&P 500, which gives each constituent the same weight and reduces the dominance of the largest technology companies. Kettner said he would look for signs that U.S. Technology shares had become technically oversold, along with clearer earnings evidence, before becoming more positive on the sector. Midterm elections, although AI-related concerns over spending, monetization, capital expenditure and debt issuance could persist into 2027.
HSBC’s wealth-investment commentary said investors should examine who is borrowing, how much leverage is involved and whether realistic cash flows can support the spending. Another HSBC investment team has said AI can speed research, back-testing and simulations but should not independently determine portfolio decisions, emphasizing explainable signals and human oversight.
The immediate implication is tactical rather than a declaration that the AI theme has failed. Kettner has previously argued that the physical construction of AI infrastructure represents genuine investment activity, while acknowledging that excessive infrastructure spending could become a risk. For individual investors, the verified warning is narrower: a strong long-term technology story does not eliminate the possibility of rapid, positioning-driven losses in the stocks financing it.