Is Liquidity the Real Risk to the AI Bull Market?

Last Friday, the AI trade finally hit a wall.After months of relentless strength, several high-flying AI-related stocks were hit hard, while a popular 3X South Korea ETF tied to the memory and storage trade collapsed more than 40%. Matt Caruso and Jason Shapiro break down why this may not be “the top,” but could be an important warning sign about leverage, liquidity, and crowded positioning.In this episode of Markets Unscripted, Matt and Jason revisit Jesse Livermore’s famous 1906 liquidity warning, when competing capital raises in the railroad sector helped signal trouble before a major market decline. Today, the question is whether massive funding needs from AI infrastructure, Google, Meta, SpaceX, Anthropic, and OpenAI could eventually strain market liquidity.They also discuss why bull markets usually do not end in one day, how deleveraging events can reveal the next leadership group, and why traders should be watching which stocks hold up best during market weakness.The conversation also covers possible next-stage AI beneficiaries beyond chips, including healthcare, software, data infrastructure, and select names showing relative strength.Topics covered:The AI trade’s sharp selloffLiquidity risk vs. valuation riskGoogle and Meta’s massive capital raisesSpaceX, Anthropic, and OpenAI IPO concernsJesse Livermore’s 1906 warning signalWhy leverage can destroy traders fastHow to spot real leadership during market pullbacksEli Lilly, Snowflake, Twilio, Veeco, and other AI-adjacent setupsBitcoin’s relative weaknessWhy position sizing matters more than most traders thinkThis episode is not about calling a bear market. It is about identifying the warning signs that could matter if liquidity starts to dry up.