Emerging markets bull Christopher Wood says the spectacular AI trade is showing clear signs of “fatigue”, and Jefferies is responding by tilting exposure toward cheaper, under‑owned markets such as India and China that stand to benefit from mean reversion away from crowded AI winners. He believes the “picks and shovels” of the AI capex boom will keep outperforming even as investors rotate out of hyperscalers and into value names across Asia.
In his newsletter 'GREED & fear', Wood writes that the new quarter has opened “with much talk of ‘AI fatigue’ as investors look out for a peaking out of momentum and rotation into cheaper ‘value’ names which have not been part of the AI trade,” citing Tencent as one Asian example. He argues that sharp pullbacks in Korea’s AI leaders are “both natural and healthy” after “hyperbolic moves,” with the Kospi now down 22% from its 19 June peak and single‑stock leveraged ETFs on SK Hynix and Samsung Electronics dropping around 30% from asset highs.
