Smart money is leaving the AI trade while bubble warnings hit levels above 2000

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Something feels different this time.

It’s not just one hedge fund calling a top.

Multiple warning signs are showing up at once.

Goldman Sachs is rotating money out of crowded AI and mega-cap tech trades and into software, energy, and pharmaceutical stocks.

Then there’s Michael Burry.

His latest positions include shorts against Nvidia, Tesla, SOXX, Applied Materials, and even Caterpillar.

That last one caught my attention.

When a company that sells construction equipment becomes part of the AI trade because everyone expects endless data center construction, it suggests the AI boom has spread far beyond chipmakers.

Now look at the valuation gauges.

Several widely followed measures, including the Shiller CAPE, Buffett Indicator, Tobin’s Q, and the Hindenburg Omen, are all flashing extreme readings, with some sitting above levels seen before the 2000 dot-com crash or the 2008 financial crisis.

Then came another reminder that AI spending isn’t free.

Microsoft plans to cut thousands of jobs across sales, consulting, and Xbox, affecting less than 2.5% of its workforce.

At the same time, some companies that rushed to replace workers with AI are already admitting they cut too deeply and are now struggling to hire experienced talent back.

That’s the part people aren’t talking about enough.

The AI story started with productivity.

Now it’s becoming a story about capital spending, layoffs, valuation risk, and whether the returns can justify the money being poured into it.

None of this proves the AI boom is over.

But when Goldman starts rotating, Burry starts shorting, Microsoft starts cutting jobs, and multiple bubble indicators are sitting above past market peaks, it’s worth asking a simple question.

Is this smart money taking profits…

Or are they seeing something everyone else is still too excited to notice?