‘Show me’: Portfolio manager suggests that tech hype is fading and firms need to prove results, even as tech-giant Intel crashes 28.6% in a single day

Now, investors are questioning whether the hundreds of billions of dollars poured into AI will ever pay off.

If you’ve been watching the swings in your registered retirement savings plan (RRSP) or your investment portfolio, you may have felt the urge to do something. But in a sell-off, the costliest moves are usually the rushed ones. Instead, focus on minimizing or eliminating your risks — and the bigger risk in many Canadian portfolios may be tech exposure investors don’t realize is there.

Why is the AI trade losing steam now?

Investors are moving “out of the hopes and dreams phase of the AI trade,” Joe Tigay, portfolio manager at Equity Armor Investments, wrote in a note to investors on the day of Intel’s plunge.

Put simply, AI companies now have to prove their massive spending will turn into profit.

That pressure is showing up in earnings. Intel’s fourth-quarter profit forecast missed analysts’ expectations. Amazon (TSX:AMZN) and Google parent Alphabet (TSX:GOOG) both disclosed heavy cash spending tied to AI, The Associated Press reported.

The U.S. midterm elections added fuel. Investors feared Democratic gains could bring tighter limits on data centre construction, according to CNN. Data compiled by CNBC shows Nov. 5 was the Nasdaq’s worst single day since April 2025.

But not everyone sees a collapse coming.

Keith Lerner, chief investment officer at Truist Advisory Services, viewed the swings as more of a knee-jerk reaction than a clear signal about tech’s future.

Is your RRSP more exposed to U.S. tech than you think?

Many Canadians assume a “diversified” fund protects them from a tech-led sell-off. This is a hard-won lesson after the Dot-com boom that started in 1995 and eventually crashed starting in the year 2000. One easier way to manage concentration risk was to invest in a broad-based fund, such as an exchange-traded fund (ETF). While ETFs and other pooled funds do offer built in diversification, that doesn’t mean they are insulated from big market corrections — and that broad index fund in many investor portfolios may carry more AI exposure.

In the Bank of Canada’s 2026 Financial Stability Report, the country’s central bank analysts flagged that a growing share of stock market value sits in a handful of large tech firms heavily invested in AI. That means an S&P 500 index fund, a global equity exchange-traded fund (ETF) or a U.S. growth fund in your RRSP could lean heavily on the same companies now under pressure.

The silver-lining for Canadian investors is that Canadian index funds have held up better, this time around, due to their heavier-weighting on banks, energy and mining. Still, the TSX isn’t immune. To illustrate, the TSX reported that Canada’s tech stocks fell 5.4% on Nov. 5, making it the worst-performing sector on the index that day.

Should you sell investments when markets drop?

Selling into a slump can lock in losses that a recovery might erase. But rebalancing inside your investment portfolio is very different from pulling money out of it.

If the shares are held inside a registered account, such as an RRSP or TFSA, then the trades don’t trigger tax. As a result, trimming an overweight tech fund and moving that money elsewhere in the account not only helps minimize sector risk but carries no immediate tax bill, although you may need to pay trading fees.