AI rout exposes Wall Street's $270 billion speculation machine

A retail-driven selloff in AI chip stocks exposed risks across Wall Street's leveraged products ecosystem, with global leveraged ETF assets exceeding $270 billion (over $200 billion in the US and more than $45 billion in Asia). South Korean retail funds offering two to three times daily AI returns lost over 20% in the week, while newly launched leveraged SpaceX funds, which attracted nearly $1 billion, have dropped about 40% from their debut. Strategy Inc.'s Bitcoin-leveraged structure also came under pressure, as the S&P 500 fell nearly 2% and the Nasdaq 100 tumbled more than 4%, with Barclays noting US leveraged ETF rebalancing has surged to several times its long-term average.