The US market allows investors to participate not just in the growth of an industry, but also in its potential downfall.
Friday, October 30, 2026, offered a reminder that the AI trade may not be a one-way street. The Nasdaq Composite plunged 2.86%, its biggest single-day fall since June 5. The S&P 500 declined 1.82%, while the Dow Jones fell 1.09%. Disappointing results and concerns around the massive capital expenditure required for artificial intelligence weighed heavily on technology stocks. Intel plunged nearly 29%, while investors also questioned Amazon’s aggressive AI spending.
What if the market has overestimated the financial returns from AI?
There is little doubt that AI will transform businesses, industries and the global economy. However, a great technology does not necessarily make every company associated with it a great investment. The amount being invested in GPUs, semiconductor manufacturing, data centres and computing infrastructure has created enormous expectations. What happens if the returns fail to justify these investments? Can investors actually invest in the other side of the AI story?
The answer is yes, particularly through the US stock market.
Betting against the AI boom
The US market has several exchange-traded products that allow investors to take bearish positions on AI, semiconductors and technology companies.
Some interesting examples include:
| Ticker | Investment theme | Exposure |
|---|---|---|
| AIBD | AI & Big Data | -2X daily |
| AIQD | AI Leaders | -3X daily |
| SOXS | Semiconductor stocks | -3X daily |
| SSG | Semiconductor stocks | -2X daily |
These instruments offer different ways to express a bearish view, depending on whether an investor believes the correction will be concentrated in AI companies, semiconductor manufacturers or the broader technology sector.
What if you wanted to make the same bet in India?
This is where the difference between the Indian and US capital markets becomes interesting. Had this investment thesis been about an Indian sector, investors would have had very limited ways to express such a view through domestic listed products.
India does have futures and options on indices and individual stocks, but it does not offer a comparable range of listed, sector-specific inverse ETFs that allow investors to directly bet against an AI or semiconductor basket.
The US market, on the other hand, provides instruments to take both sides of an investment theme. You can invest in the companies building the AI revolution or take a bearish position on the very same industry.
That is the beauty of a developed capital market: it gives investors the freedom to express their investment views, whether bullish or bearish.
A word of caution
These products are not designed for long-term investing. They reset their leverage daily. Consequently, volatility and compounding can erode returns even when the underlying index eventually moves in the expected direction. For instance, AIBD targets -2X the daily return of its underlying index, not twice the inverse of its long-term return. AIQD is an ETN rather than an ETF and carries additional issuer credit risk.
The objective is not to predict when the AI bubble will burst. It is to understand that investors should have the ability to participate in both sides of a market opportunity. After all, investing is not just about finding the next big winner. Sometimes, the opportunity lies in identifying what could become the next big loser.
Disclaimer: This article is for educational purposes only and is not an investment recommendation. Inverse and leveraged products carry substantial risks and may not be suitable for all investors.