# AI dip-buying faces warning as Horwitz sees scope for 40–60% market decline

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/investing/48252
Published: 2026-11-04T05:12:26.000Z
Updated: 2026-11-04T05:12:26.000Z
Section: Investing

> Todd Horwitz warned that AI debt and profitability concerns could drive a 40–60% market decline, with a sharp rebound potentially preceding renewed selling.

The sell-off in technology stocks may not yet offer a compelling opportunity to buy AI shares. A sharp rebound from oversold conditions could give way to renewed selling, with pressure on equities persisting into year-end.

In a November 3 interview with David Lin, Todd Horwitz, founder of BubbaTrading.com, warned that the market could face a further 40–60% decline, citing concerns about AI companies’ debt and profitability. He argued that the recent technology sell-off had not fully deflated the bubble.

Horwitz distinguished AI’s long-term potential from the investment case for its shares today. The internet ultimately transformed everyday life and business, but many investors lost money during its early stock-market bubble, he said. He cautioned against committing all available capital to AI stocks on the assumption that the retreat represented a once-in-a-lifetime buying opportunity.

He pointed to what he described as trillions of dollars in off-balance-sheet debt across AI businesses. Strong reported earnings needed to be assessed alongside borrowing and companies’ ability to generate enough profit to support it, he argued. He also said AI-related job cuts could reduce workers’ income and retirement-plan contributions, weakening a source of money flowing into equities.

Over the next three or four weeks, Horwitz envisaged a large rally followed by another leg lower. He described that potential rebound as an opportunity to sell. While some shares that had already fallen 40–45% might merit consideration, he said many remained in bubble territory.

He expected the midterm election results to produce only a short-lived market reaction. Large financial firms position for particular outcomes, making sudden moves possible when results differ from expectations, he said. But he did not regard the winning party as a lasting driver of market direction and thought oversold conditions could support a sharp rally regardless of the result.

Horwitz said his long-term investing and short-term trading followed different approaches. He had retained his investment holdings, added substantially during the decline and intended to keep buying. Alongside hedges on those holdings, he said he continued to take short positions when trading opportunities arose.

For year-end, he warned that further losses remained possible, including a repeat of the sharp downturn around Christmas in 2018. He acknowledged that the historical tendency for stocks to rally after elections worked against his bearish view, but maintained that conditions could worsen considerably before improving.