Is AI Cracking – or About to Break Out?

AI stocks are showing strength after a recent pullback, with the AI-heavy Nasdaq 100 falling over 4% since mid-June and many AI darlings experiencing double-digit declines. Despite some bearish sentiment and warnings from financial news outlets, experts suggest this is not the start of a crash. The current price action is attributed to classic end-of-half, beginning-of-half repositioning by portfolio managers who are rebalancing by trimming positions that have performed well in the first half of the year and redeploying into underperforming names. This rotation is not driven by fundamental changes in AI infrastructure demand but rather by portfolio adjustments and holiday trading patterns. Legendary investor Louis Navellier also noted this market rotation and the impact of traders being on holiday, suggesting that winning stocks may be temporarily punished but are expected to bounce back.