Heraldo de Paola

The market is extremely overconcentrated in seven AI-related mega-caps (Nvidia, Microsoft, Amazon, Google, Meta, Broadcom, Micron) which drive 52% of S&P 500 earnings growth while their free cash flow is falling. Any disruption to the AI capex cycle, e.g., from geopolitical shocks or failure to monetize investments, could trigger a severe correction. The VIX 3-month is near pre-war lows, making long-dated put options on the Nasdaq relatively cheap. He recommends buying 6-month put options on QQQ (Nasdaq ETF) at approximately 2 standard deviations strike (-35% from current level) as a hedge for investors who are still constructively positioned in equities.