Investors are dumping AI stocks as ‘tech wreck’ worsens. Here’s where they’re turning now.

The rotation reflects a familiar pattern: when a crowded trade unwinds, capital often seeks the deepest, most liquid markets available. Government bonds fit that description, offering a port in a storm for investors reducing exposure to AI-linked equities after a prolonged run. The shift is less a verdict on AI's long-term prospects than a sign of how stretched positioning had become.

What complicates the move is inflation. Rising price pressures can push yields higher and bond prices lower, meaning the traditional safe haven carries its own risks. If inflation stays hot, the appeal of duration weakens, and investors may find fewer comfortable places to hide.

For observers, the key questions are whether outflows from AI names persist or stabilize, and whether bond demand holds if inflation data surprise further. The rotation itself is a sentiment signal worth watching — it suggests caution is replacing momentum, at least for now.