The S&P 500 futures registered a 0.32% dip this morning before the New York trading session began, following a 0.54% decline yesterday. This continued downward trend suggests a prevailing skepticism among investors regarding American equities. In stark contrast to the modest 0.93% year-to-date gain for the S&P 500, international markets have demonstrated considerably more vigor. The UK’s FTSE 100 has climbed nearly 10% over the same period, while the STOXX Europe 600 has advanced 6.53% to reach an all-time high. Asian markets have shown even more impressive growth, with Japan’s Nikkei 225 up almost 14% and South Korea’s KOSPI surging an astonishing 45%. This divergence has prompted some market observers, like Yardeni Research, to attribute the underperformance of US stocks to what they term “AI derangement syndrome.”
This “AI derangement syndrome” describes a market environment where investor apprehension surrounding artificial intelligence-linked stocks is reportedly exerting a drag on the broader US market. Nvidia, the chipmaker that currently holds the title of the world’s largest company by market capitalization, serves as a prominent example. Despite Nvidia’s consistently strong business performance, including a fourth-quarter 2025 earnings report that surpassed expectations and set new records, its stock experienced a 5.46% decline yesterday. Year-to-date, Nvidia’s shares are down 0.86%. Bespoke Investment Group noted that out of 13 total quarterly reports, Nvidia has achieved a “triple play”—beating earnings per share, sales, and raising guidance—ten times. However, the firm also highlighted that following its last seven reports, shares have averaged a 3% decline. This data point, alongside Bespoke’s tracking of a custom “AI Doom basket” of stocks, indicates a negative sentiment towards AI-related companies among traders.
The impact of these AI-linked technology stocks extends to the overall S&P 500 performance. An examination of the equal-weight S&P 500, a notional index that assigns equal value to each stock regardless of market capitalization, reveals a 6.7% increase year-to-date. This suggests that the US market might be performing better without the outsized influence of the dominant technology companies. Conversely, the tech-heavy Nasdaq has seen a 1.56% decrease for the year. Jim Reid and his team at Deutsche Bank pointed to a “serious slump for semiconductor stocks” as a primary driver of the market’s recent decline, further underscoring the role of AI-related companies in the current market climate.
Some analysts are now re-evaluating AI’s perceived role, moving from seeing it as an asset to a potential liability. Ed Yardeni of Yardeni Research recently posed a critical question to clients: “If AI continues to disrupt, if not destroy, more and more business models, won’t that cause a recession?” He elaborated on potential scenarios, including widespread white-collar layoffs that could trigger blue-collar job losses, or a credit crunch within private credit markets. UBS Group AG has already adjusted its private credit default forecast, with strategists warning that losses could reach as high as 15% in a worst-case scenario, an increase from 13% just weeks prior. This growing concern among financial institutions highlights the evolving perception of AI’s broader economic implications.
In response to this shifting sentiment, corporate America appears to be adjusting its communication strategies. There is evidence that executives are becoming more circumspect about publicly emphasizing AI. Bespoke Investment Group tracked the number of AI mentions in conference calls by major technology companies including Apple, Amazon, Alphabet (Google), Meta, Microsoft, and Nvidia. Their analysis showed a notable decrease in AI mentions this quarter, totaling 348. This figure is down significantly from 401 mentions last quarter and represents 102 fewer than the peak reached during the first quarter of the 2025 earnings season. This reduction in AI rhetoric suggests an acknowledgment among leadership that constant promotion of AI may be counterproductive in the current market environment.
