The biggest discussion that top Goldman Sachs trader (and flows guru), Lee Coppersmith, had with clients this week wasn’t whether AI is over - it wasn’t.

The debate has shifted to how investors should own it from here.

If anything, the secular backdrop across both the US and Asia continues to strengthen. Capex expectations remain robust, earnings revisions continue to move higher, and we saw another week of significant inflows into US technology.

Prime Brokerage data tells the same story - Semis are on pace to finish as the most net bought global subsector for a second straight year, with net allocations now at record highs.

What’s changing isn’t the fundamental story - it’s the market structure. leverage continues to build, and volatility across large-cap Tech continues to expand relative to the broader market even as prices move higher.

At the same time, global HF net leverage has climbed to 4-year highs and this is one of the sharpest increases over a 4-week period in the past 5 years, driven by significant net buying activity and mark-to-market … Here’s our full PB rundown.

We’re also seeing some signs of broadening despite a pickup in that debate at the end of the week. Flows have expanded into Financials, cyclicals and parts of Europe and Asia, but not at the expense of AI. In fact, while overall US Tech exposure has risen toward 5-year highs, Mag 7 gross and net exposure has fallen to 1-year lows as investors rotate deeper into the AI ecosystem - particularly Semis and Asian chipmakers - rather than simply adding more mega-cap exposure.

The other major takeaway from June is that macro is back. The Iran deal serves to remove one inflation risk and Brent gave back much of its geopolitical premium, only for the Fed to replace it with renewed policy uncertainty. Front-end rates repriced higher following a hawkish FOMC, and markets should now recalibrate event volatility premium more carefully (see NFP day and FOMC day as prime examples).

One interesting observation has been how quickly investors have faded geopolitical risk. Brent has retraced most of its war premium, Managed Money has sold nearly $25bn of crude over the past seven weeks, outright shorts have reached new highs after a record build this past week, and net length now sits below pre-war levels (h/t Rob Quinn). Investors have been remarkably quick to close the book on oil and shift their attention back toward rates and Fed policy.

Brent Managed Money Shorts – weekly change

Finally, systematic flows remain an important amplifier. Dealer gamma from leveraged ETFs - particularly in markets like Korea - continues to reinforce both upside momentum and downside moves, adding another source of volatility beneath the surface. One stat that stood out to me: leveraged ETF dealer gamma rebalancing can exceed 20% of Korea's market ADV on large-move days.

Our takeaway hasn’t changed - AI remains the highest-conviction secular story we hear from clients and continues to attract capital globally.

But June has been a reminder that even the strongest secular themes don’t trade in a vacuum.

The market is carrying more length, more leverage and, as a result, more volatility.

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