Something strange is happening on Wall Street. The same technology stocks that investors couldn’t stop buying for three straight years have suddenly become the thing they can’t sell fast enough.
Over the past few weeks, a wave of AI-related anxiety has swept through the stock market, and it’s not just hitting the obvious names.
Software companies, financial firms, logistics operators, real estate companies, and even insurance and wealth management stocks have all been caught in the downdraft. Billions in market value have evaporated in single trading sessions.
One viral blog post about AI’s potential to cause mass unemployment nuked 800 points off the Dow in a single session.
The market is telling you something. Listen. The mood has shifted fast.
As Bloomberg put it, AI has morphed from the market’s savior into a marauder.
And if you’re sitting there staring at your portfolio, wondering why it all went red at the same time, two letters explain everything.
AI.
So what’s going on? And more importantly, what can you actually do about it?
The Three-Headed Monster
The anxiety hitting markets right now isn’t one thing. It’s three distinct fears all hitting at the same time, and each one targets a different part of your portfolio.
One is about what AI might destroy. Another is about what building AI is costing. And the third is about whether AI will ever actually pay for itself.
They’re related, but they’re not the same, and that distinction matters because each one requires a different defensive strategy.
J.P. Morgan estimates roughly $2 trillion has been wiped from software market caps alone, and the damage has spread well beyond tech into financials, real estate, logistics, and wealth management.
The dot-com comparisons are getting louder. And the numbers coming out of recent earnings calls are making even the biggest AI bulls uncomfortable.
Our premium article breaks down all three sources of AI angst in detail, explains exactly why each one matters for your portfolio, and names specific stocks to protect against each.
Enter the HALO Trade
With all this anxiety swirling around, smart money on Wall Street has already started moving. And there’s a name for where it’s going.
Goldman Sachs, Morgan Stanley, and other major firms have started rallying around a concept originally coined by Josh Brown, CEO of Ritholtz Wealth Management: the “HALO effect,” which stands for Heavy Assets, Low Obsolescence.
The basic premise is that in an era where AI threatens to disrupt anything digital, the safest place to park capital is in companies that own and operate things AI simply can’t replicate.
The data behind the HALO thesis is interesting. Goldman published specific outperformance numbers that show this isn’t a speculative idea.
It’s already playing out in real portfolios. And their research identifies which sectors qualify and which don’t.
Our premium article breaks down the full HALO framework, including the specific sectors Goldman identified, the stocks that best capture the theme, and what’s driving institutional (“smart”) money into these trades right now.
Subscribe to Babypips Premium now to access the full breakdown and get instant access to the full list of stocks and sectors.
The Contradiction
Here’s the part that makes this whole situation so confusing for investors.
As Bloomberg pointed out, there’s a fundamental contradiction at the heart of Wall Street’s AI anxiety.
- On one side, the market is terrified that AI will be so powerful that it destroys entire industries.
- On the other side, the market is equally worried that AI companies are spending too much money on something that might not work.
Neither of those things can be true at the same time.
Either AI is an unstoppable force that will reshape every industry, or it’s an overhyped money pit.
The honest answer is somewhere in the middle. But the market doesn’t do nuance. It does panic.
And panic creates opportunity.
So What Can You Do About It?
The analysis we published for Babypips Premium members breaks down specific ETFs designed to hedge against each of the three AI fears: sector disruption, collapsing free cash flow, and the ROI gap.
These aren’t speculative bets. They’re well-established, liquid funds that are specifically built to steer your portfolio away from the companies most vulnerable to AI anxiety and toward the ones that are thriving because of it.
But we don’t want to leave you completely empty-handed. So here’s one from the list.
New to ETFs? An ETF, or exchange-traded fund, is a basket of stocks bundled into a single investment that trades on an exchange just like any individual stock. Instead of buying shares in one company, you buy a slice of dozens or hundreds of companies at once. They are generally cheap to own, easy to trade, and a straightforward way to get exposure to a theme, sector, or strategy without having to pick individual winners. Every ETF mentioned later is publicly traded and accessible through any standard brokerage account.
Your Freebie: DSTL
The Distillate U.S. Fundamental Stability & Value ETF (DSTL) provides protection against the AI “ROI Gap,” the risk that AI spending never translates into AI profits.
DSTL screens roughly 500 large-cap U.S. stocks and selects the 100 that score best on three criteria: high free cash flow yield, low debt, and stable cash flows.
Then it weights them by how much free cash flow they actually generate.
Why does that matter right now?
Because those three filters are designed to automatically weed out exactly the kind of companies that are burning cash on speculative AI buildouts (high debt, volatile cash flows, uncertain returns) and keep the ones with proven, current profitability.
Here’s what you get with DSTL:
- Top holdings include names like Merck, AbbVie, Johnson & Johnson, and Procter & Gamble. Companies that are generating cash, not burning it.
- Expense ratio is a reasonable 0.39%.
- YTD return of roughly 4.7% while the S&P 500 sits roughly flat. It also just hit a new 52-week high.
In plain English: DSTL is like a quality filter for the stock market. It automatically avoids the companies most exposed to AI valuation risk and loads up on the ones with the strongest financial footing.
If the “show me the money” moment arrives for AI and the receipts are thin, DSTL is built to hold up.
It’s a solid pick. But it’s not even the best one on our list.
Want the Full List?
DSTL is a strong starting point, but our full premium analysis covers 10 ETFs across all three sources of AI angst, including our top two picks that have significantly outperformed DSTL and the broader market.
In the premium article, you’ll get:
- The #1 HALO ETF that is the purest play on the “AI can’t touch this” theme, and it’s the fund that Goldman Sachs’ framework points directly toward.
- The #1 Cash Flow ETF that has been quietly crushing the S&P 500 in 2026. It’s the largest and most liquid fund in its category, and it’s specifically designed to avoid the big tech names that are hemorrhaging cash.
- The ETFs to consider for reducing mega-cap concentration risk, including one that holds the same 500 stocks as the S&P 500 but strips out the top-heavy AI weighting that’s dragging most portfolios down.
If AI angst is real (and the $2 trillion in wiped-out market value suggests it is), then you don’t want to be guessing.
👉 Subscribe to Babypips Premium to get the full breakdown, including all 10 ETF picks ranked by conviction, and start positioning your portfolio before the next wave of AI angst hits.
