The Q3 AI Hype Cycle - When Does Reality Bite?

Been looking at the AI sector's trajectory lately, especially with some of the wild valuations floating around. I'd put the odds at about 60% that we see a meaningful correction – defined as a 15-20% pullback from current highs in the broader AI-linked tech indices – before the end of Q3. There's just so much speculation baked in, and while the underlying tech is transformative, the market seems to be pricing in perfection on every single company, from chip makers to obscure SaaS outfits. A decent earnings miss from a major player, or even just a slight deceleration in projected growth, could be the pin. This isn't FUD, just a recognition that gravity still exists, even in the metaverse.

The enthusiasm is warranted to a degree, but the sheer velocity of the recent run feels unsustainable. We've seen this movie before, multiple times. While I'm not calling for a dot-com bust repeat, the frothiness suggests that even minor disappointments could trigger a swift re-evaluation. Keep an eye on $US30, which, despite its daily gyrations, seems to be holding up fairly well around the 53800 mark, but cracks there could certainly accelerate a broader tech downturn.