Momentum trade turns cold after rewarding AI stock bets

  • Investors bought rising stocks and bet against shares facing weakness.
  • Micron Technology, Nvidia and Advanced Micro Devices were among this year’s favored AI stocks.
  • The momentum strategy was especially profitable this year before turning sharply colder.

The momentum trade, which involves buying stocks already rising and betting against struggling shares, has sharply cooled after years of strong returns. Its performance was particularly strong this year as investors concentrated on artificial-intelligence companies including Micron Technology, Nvidia and Advanced Micro Devices, while positioning against businesses viewed as vulnerable to wider AI adoption.

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