US investors are borrowing record amounts of money to make ever-bigger bets on the AI buildout, increasing their exposure and boosting the volatility of the market.
The $1.4 trillion in margin debt, along with growth in high-risk exchange-traded funds that amplify the moves of underlying stocks, exacerbated swings in South Korea’s market that spilled into US trading last week.
The situation is risky, analysts told The Wall Street Journal: Leveraged ETFs supercharge gains in a bull market, but “what goes up fast can crash down even faster.”
Last week’s tech selloff suggests investors are worried, but the announcement of a $1 trillion AI investment fund by South Korea’s government shows Seoul, like many other countries and Big Tech firms, believes the AI chip boom will continue.
