Deutsche Gives Powerpoint on How the AI Rally “F’ed Around” and is Now Deep in “Find Out” Territory

If you thought Ray Dalio’s weekend Doomer Twitter article was scary… catch a load of what Deutsche Bank just said. Hint: it might force you to look at your AI-heavy portfolio the way you look at milk that expired a week ago. Technically fine. Probably.

According to the suits based in Frankfurt, this little AI wobble we’ve all been watching from the front row is not a random blip, and it sure as heck didn’t start in February. They say the seeds were planted all the way back in 2022… the moment OpenAI dropped ChatGPT and declared war on every white-collar workflow in existence.

Since January 28, the Nasdaq Composite is down 5.3%. The so-called S&P 500 Mag 7’s (Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia, Tesla) are off more than 8% in that same stretch. Meanwhile, the S&P Software & Services Index has been damped nearly 20% this year.

Why? Because investors are no longer chanting “AI lifts all boats.” Now they’re asking which boats are about to get torpedoed into oblivion. Luckily for us, Deutsche Bank laid out three reasons the market is about to be cooked.

(Source: Marketwatch)

First, it starts with differentiation. Back in 2022, everyone assumed AI would be pure upside. Now, when Anthropic launches a legal plugin or a startup drops an AI tax tool, entire sectors start to sell off almost in an instant. Even a freight-scaling tool from Algorhythm was enough to send logistics stocks into a spiral.

Next, we have the valuation dilemma. This is pretty straightforward. Seven companies make up roughly 30% of the S&P 500. And what do all of these companies who dominate the index have in common? Ding ding ding, YUGE AI credit card bills. Investors can’t decide if AI is overhyped… or if it’s moving so fast that entry-level jobs are about to become folklore. Either possibility makes a 35x multiple feel less comfortable.

Lastly, they went on to say that the threat feels immediate. Countless essays warning white-collar workers they’re about to be “blindsided” are going viral. OpenAI’s dominance is being questioned. Chinese models are cheaper and catching up. AI agents are improving at a pace that’s hard for even the experts to wrap their heads around.

And then the legacy bank decided to really drop the hammer… Deutsche’s FX team says this AI concentration risk is now messing with the dollar’s safe-haven mystique. Traditionally, when stocks fall, the dollar gets stronger. Not anymore. The U.S. Dollar Index fell 9.4% in 2025 and has already shed another 1.4% this year. When U.S. equities wobble because of AI overexposure, money doesn’t automatically run into dollars. It runs… elsewhere.

Translation: if the crisis starts in Silicon Valley, the dollar doesn’t get to swoop in wearing a cape and pretend it wasn’t in the room when the fire started.

Deutsche isn’t predicting an AI asteroid. They’re not saying SaaS gets Thanos-snapped tomorrow. In fact, they think a chunk of this selloff is emotional. These companies still own their workflows. They still sit inside enterprise systems. They still have proprietary data that doesn’t just evaporate because a chatbot got smarter. But what they are warning about is something pretty scary. 

If AI models become utilities (plug-and-play, commoditized, widely accessible) then the power doesn’t sit at the foundation layer. It moves up the stack. To applications. To distribution. To whoever owns the interface. And the market may already be pricing certainty in companies that don’t actually control that layer.

At the time of publishing this article, Stocks.News holds positions in Apple, Amazon, Alphabet, Microsoft, Meta, and Tesla as mentioned in the article.