- $250B shifts from AI stocks to value sectors in Q1 2026.
- Nasdaq-100 drops 15% YTD; Russell 2000 surges 10%.
- VIX hits 28; defense stocks draw $50B on geopolitics.
By Serena Dalton, Senior Correspondent
April 13, 2026
Great Rotation AI stocks shift totals $250 billion (EPFR Global) to value sectors. Institutions flee overvalued tech amid extreme fear. CNN Fear & Greed Index plunges to 12, lowest since October 2022.
Bloomberg data shows the sharpest rotation in four years. Geopolitical tensions hit AI chipmakers via supply chain risks, fueling the exodus.
AI Stocks Plunge 15% YTD as Valuations Unwind
Nasdaq-100 Index drops 15% year-to-date through April 13, 2026 (Bloomberg L.P.). Nvidia Corp. (NVDA) falls 22% from March 2026 peaks to $105 per share.
Michael Hartnett, Bank of America Global Research chief strategist, warns AI trades hit 50x forward earnings. Taiwan Strait risks amplify semis exposure.
Advanced Micro Devices (AMD) sheds 18%. Philadelphia Semiconductor Index (SOX) loses 12% over the past two weeks (Reuters, April 13). Taiwan military drills disrupt global chip supply.
Value Sectors Attract $180B Inflows on Lower Multiples
Financials draw $80 billion. Bank of America Corp. (BAC) rises 12% to $42 (NYSE).
Energy sector pulls $60 billion. ExxonMobil Corp. (XOM) gains 8% as West Texas Intermediate (WTI) crude climbs to $85 per barrel (ICE futures data).
Lori Calvasina, RBC Capital Markets U.S. equity strategy head, highlights value appeal in her April 12 client note. "Value trades at 12x earnings versus AI's 45x," she states.
Russell 2000 Index surges 10% YTD. Industrials and materials secure $40 billion combined (EPFR Global, week ending April 13).
Geopolitics Accelerates Great Rotation AI Stocks
China's April 10 military drills near Taiwan escalate risks. Taiwan Semiconductor Manufacturing Co. (TSMC) drops 14% on supply disruption fears (TWSE data).
U.S. 10-year Treasury yields rise to 4.5% (Bloomberg). Federal Reserve March FOMC minutes, released April 10, signal no rate cuts before Q3 2026.
David Kostin, Goldman Sachs chief U.S. equity strategist, projects $300 billion total rotation by year-end. "Geopolitics now trumps AI hype," he declares.
Europe benefits. Stoxx Europe 600 Index climbs 7%, with Rheinmetall AG up 25% on NATO defense pledges (Euronext).
Central Banks Hold Firm Amid Inflation Pressures
European Central Bank maintains deposit rate at 3.75% on April 11. President Christine Lagarde cites Ukraine-related energy risks.
Bank of Japan ends yield curve control on April 12. Yen appreciates 5% to 140 per USD, lifting domestic cyclicals (BOJ statement).
Commodities lure $30 billion. Gold futures hit $2,450 per ounce; LME copper rises 10% (Financial Times).
Hedge Funds Load Defense and Energy Plays
Hedge funds allocate $50 billion to defense stocks. Lockheed Martin Corp. (LMT) advances 15% to $520 (NYSE).
BlackRock's iShares U.S. Aerospace & Defense ETF (ITA) posts $12 billion YTD inflows (ETF.com).
Chevron Corp. (CVX) acquires $5 billion in Permian Basin assets on April 9. OPEC+ production quotas support crude stability.
Hartnett forecasts 20% S&P 500 rebalancing by June. Value outperforms growth by 1,200 basis points quarter-to-date (BofA data).
Emerging Markets Rally on Supply Chain Shifts
India's Nifty 50 Index jumps 9% on $15 billion inflows tied to China+1 strategy (NSE).
Brazil's Bovespa Index rises 11% via Vale SA's record iron ore shipments (B3 exchange).
Mexico's IPC Index gains 8% from auto nearshoring trends (BMV, IMF April outlook).
Great Rotation AI Stocks Reshapes Markets Through 2026
S&P 500 forward P/E multiple contracts to 20x from 28x peak (FactSet). Equal-weight S&P outperforms cap-weighted by 8%.
CBOE Volatility Index (VIX) spikes to 28 on April 13. Options market skews toward puts.
Calvasina sees persistence absent 20% AI earnings beats. Kostin eyes S&P 4,800 as resistance. Great Rotation AI stocks tests bull market resilience versus deeper correction.
