Most investors say they still believe in the AI rally.
Most are also quietly buying insurance against it, and the kind of insurance they're buying tells you what's really on their minds.
The tech-heavy S&P 500 is more top-heavy than at any point since the 1960s, with just 10 stocks driving roughly 40% of the index.
The bull market is stretching into a fourth year, and worries about heavy AI spending are growing louder among the same managers riding the wave. Buyers are moving past plain put options and into hybrid contracts that pay off when stocks, oil, and bonds all swing at the same time.
Oil prices have swung sharply since the Iran war broke out, and those swings have spilled into other markets at the same time. That's exactly the cross-asset move these exotic options are built to capture.
Hedging behavior is one of the cleanest tells in markets. We unpack signals like this in Market Briefs every weekday morning - a free investing masterclass shows up with your first issue.
Investors keep pointing to the same handful of worries when they explain why they're hedging.
Billions are flowing into AI capex (capital spending on data centers, chips, and equipment) without clear returns yet. Long-term bond yields keep climbing, and geopolitics is doing things to oil prices that ripple straight into inflation expectations.
The real fear isn't a single shock to one market. It's a shock that hits stocks, bonds, and commodities at the same time, which is why traders want options that pay off across all three.
Even with the worry, the majority of managers aren't running for the exit.
Most still see megacap AI and tech as the place to be, even as they pay up for downside protection. The hedge is the price of staying in the trade rather than a bet against it.
Sentiment looks less euphoric than during past bubbles, which some managers see as a moderating sign for the rally.
Watch how concentrated returns get among the top names, AI capex disclosures from the hyperscalers, and what happens to long-dated Treasury yields. When the people running the rally are also paying up to hedge it, that's the trade.
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