#Gate股票畅聊季 AI Market Collapse + Stagflation Looming: U.S. Stocks Enter a Period of Volatility

The market is seriously misjudging the AI sector’s ability to deliver on earnings and the macroeconomic pressure from stagflation. The risk-reward profile of one-way bets on U.S. stock indexes has deteriorated sharply.

I. Root of the Risk: Global Liquidity Imbalances and an Unsustainable AI Capex Bubble
The source of this market risk lies in the long-term structural imbalance in global cross-border capital flows. Overseas funds have continued pouring into dollar assets, steadily pushing up valuations across the U.S. stock market. This has also been the underlying liquidity foundation for rising U.S. stock valuations over the past two years.
Vast amounts of capital have ultimately flowed into the biggest theme of this cycle—the epic wave of capital spending driven by the AI arms race.
The inflow of capital into the sector inevitably drives up asset prices, but capital investment ≠ realized profits. This is the core contradiction behind the mounting pressure across the AI supply chain.
The market’s biggest misconception: seeing AI use cases continue to expand and simply assuming that revenue and profits will materialize in tandem.
Reality has already provided the answer: GPU hardware prices and computing-power token prices have diverged sharply. Upstream hardware investment is soaring, while downstream monetization cannot keep pace with capital spending.
Industry bellwether CoreWeave’s stock has plunged 77% from its peak. As an AI computing-power stock highly sensitive to credit conditions, its collapse signals that credit risk across the entire AI supply chain is rapidly building.

Capital prices the story; cash flow determines the floor for stock prices.
Elevated capital spending has severely strained corporate balance sheets, and the entire AI supply chain is facing a dual test of earnings validation and credit contraction. Until material defaults and M&A events occur, credit pressure in the AI sector will continue to spread.

II. The Biggest Macroeconomic Black Swan: Stagflation Is Emerging
The biggest risk facing the stock market now is not short-term liquidity tightening, but the onset of stagflation. Over the past two months, the market has seen clear sector rotation, without a broad flight to safety: technology stocks have continued to weaken, consumer staples have gained against the trend, and the SPY and equal-weight RSP indexes have diverged significantly. These are the most typical market signals of a stagflationary environment, according to Wallstreetcn.
Inflation is accelerating, and elevated oil prices are pushing prices higher still. Yet the market’s expectations for Fed rate hikes are extremely conservative, pricing in just 55 basis points of hikes over the entire cycle.
Policy lags have created a major risk: the Fed will either be forced to launch an aggressive rate-hiking cycle or allow long-term yields to surge, steepening the yield curve.
Either outcome would deal a heavy blow to stock market valuations.
Short- and long-term bond yields are diverging: the 2-year yield has fallen significantly more than the 30-year yield.
Bond traders have already priced in the risk: a short-term stock market decline does not mean long-term yields will fall. Persistent inflation will firmly support long-term bond yields.
Even if a technical rebound occurs in the short term, the overall macroeconomic environment will remain a drag on equities.
The U.S. Dollar Index and U.S. stocks are weakening in tandem, sending a key signal of foreign capital outflows.
When risk assets fall and the dollar weakens at the same time, it means overseas investors are selling dollar assets in bulk, offloading AI tech stocks and converting dollars back into their local currencies. Capital is collectively withdrawing from dollar markets.
This closely resembles the capital flows seen during the previous tariff adjustment period. Foreign investor withdrawals will further amplify pressure on U.S. stocks.

III. Election Results Reshape Industrial Policy, Bringing a Turning Point for Tech Capex
The results of the midterm elections are rewriting the pace of AI industry expansion through policy.
A sweeping Democratic victory has led the market to broadly expect stricter regulation of the AI industry. Data center approvals and computing-power expansion will both face constraints, directly limiting the long-term ceiling for AI capital spending, according to Reference News.
Policy shifts in key industrial hubs are directly impacting a number of core stocks: Tesla and Oracle have established major data center and industrial operations in Texas. Changes in the local political landscape are directly hampering data center expansion plans, becoming a major factor weighing on their share prices. Texas-based independent power producer VST is deeply tied to data center power demand. Following the election, expectations for industry expansion cooled rapidly, and its business outlook quickly deteriorated.
High debt + strict regulation: the stock market is becoming increasingly tied to the political cycle. Any shift in policy direction could instantly rewrite earnings expectations for tech monopolies that are heavily dependent on capital spending.
Market volatility is being persistently suppressed, while balance sheets are already extremely fragile. Even minor policy changes could trigger a systemic amplification of volatility.

IV. Strategy Ahead: Move Beyond One-Way Bets on Indexes and Shift to Structural Opportunities
Pressure from a simultaneous decline in stocks and bonds has not fully eased. Going heavily into one-way bets on broad-market indexes at this point offers very poor risk-reward.
The market is unlikely to enter a full-fledged bear market immediately, but the S&P 500 is highly likely to move into a wide trading range. After the previous period of heavy speculation, semiconductor and AI computing-power stocks are extremely crowded, making a sustained trend unlikely in the short term.
Two key risks need to be monitored continuously:
First, credit risk in the AI sector continues to spread, with corporate debt defaults emerging;
Second, inflation continues to exceed expectations, forcing long-term interest rates higher.
If the two risks converge, U.S. stocks will face a deep correction.
Investment thinking must shift completely: abandon trend trading in broad-market indexes and focus on alpha from individual stocks.
Avoid highly leveraged computing-power and data center stocks with high capital spending. Prioritize subsectors with stable cash flows, strong earnings delivery, and lower exposure to regulatory policy shocks, using individual-stock outperformance to withstand broader market volatility.

Risks do not materialize overnight; they erupt after vulnerabilities accumulate over the long term. The current period is only the beginning of the correction. The market will likely first go through a painful valuation reset before a new wave of opportunities emerges. Under the dual macroeconomic constraints of stagflation + credit contraction, cautious defense and selective stock picking are the most prudent trading strategy for now.