What a difference a few weeks make on Wall Street. Earlier this month, artificial intelligence (AI) stocks experienced a sudden sell-off. The tech-heavy Nasdaq-100 declined by about 6.5% between Oct. 6 and Oct. 16. Some of the biggest share price declines were among semiconductor stocks and other companies involved with supplying the build-out of AI data centers worldwide. Tech stocks have recovered slightly over the past few days since Oct. 16, but many investors remain nervous about the AI trade. What if AI companies are borrowing too much money? Will major AI hyperscalers keep spending hundreds of billions of dollars on AI capital expenditures? And if they do, will those investments pay off at a high enough level to justify the cost? If you're uneasy about the AI boom and want to diversify your investment portfolio, now could be a good time to buy bonds. Bond yields have risen in the past year to over 5% on the most-watched U.S. Treasury bonds. Higher bond yields are sometimes a sign of a looming slowdown in the stock market. But they can also be an opportunity to protect some of your money if bonds become a "safe haven" during the next stock market crash.
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