AI bulls and bears

"The bull argument is that consensus expectations for hyperscaler capex have continued to be revised up at an annualized pace of 100%+ over the past three months," the note said.

"Semis had overshot their relationship with AI capex expectations, but the recent pull-back has led to a realignment, suggesting that much of the earlier froth has been removed."

Now for the bear argument: according to the report, it is that the path to monetising AI is uncertain thanks to various emerging headwinds.

"The decline in the Silicon Data Token Expenditure Index shows customers continue to rotate away from expensive frontier-lab models, with a decline in the index associated with underperformance for the hyperscalers," the report said.

"Hyperscalers are down 25% relative to the broader market - and their underperformance has preceded weakness among AI capex beneficiaries by several months, implying further downside for European tech names."

The AI trade might feel a bit complicated right now.

There are big selloffs, big gains, lots of questions and concerns, and everyone is trying to work out what might happen next and what strategy to follow - which feels especially tricky because there are seemingly arguments for every approach.

Here's some food for thought from a BofA Global Research report, in which strategists have laid out both the bull and bear arguments on AI momentum.