High-Conviction Bets Turn Toxic in Week of Wall Street Reversals

Wall Street entered 2026 all-in — record-low cash, minimal hedging, maximum conviction. Six weeks later, a slew of consensus trades are misfiring.

AI was supposed to be the can’t-miss trade. Instead, it became the threat — not to the companies building it, but to the asset-light businesses it could replace. Software firms, wealth managers, brokers, tax advisers — across the white-collar world, a decade of margin expansion repriced in weeks, sending shock waves through private debt markets loaded with loans to the same companies.