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The AI trade became overcrowded, and many are now panicking about the prospects of stocks that had run too high and are now facing uncertainty in a rapidly changing environment. This was confirmed by Charles Schwab Corporation last week when it published its Q1 2026 Trader Sentiment Survey. According to the survey results, only 52% of the traders were bullish on AI stocks compared to 64% in the previous quarter.
This shift in retail sentiment is generating a debate around whether AI stocks are risky right now. Contrarian investors believe the dip provides an opportunity, and they’ve been given a pat on the back by none other than Morgan Stanley. Analysts at the financial services firm believe high-quality companies that are growing strongly are worth buying at an attractive valuation. The tailwind of AI adoption is currently dominating the disruption fears as far as business performance is concerned. Morgan Stanley analysts believe investors should utilize the sell-off to take positions in software stocks that will find a way to deal with the potential disruption that newer AI models have caused.
