'I just want out': Why Jeffrey Gundlach is moving his money as far from AI as possible - and what he's doing instead

By Barbara Kollmeyer

Investors are on the 'hard side of the street' now, says DoubleLine CEO

DoubleLine CEO Jeffrey Gundlach, pictured at the annual Milken Institute Global Conference in Beverly Hills, Calif. on May 6, 2026, is backing away from the AI trade.

So-called bond king Jeffrey Gundlach is sounding alarm bells over the artificial-intelligence trade, saying he "wants out of the epicenter" of the hottest investment themes in decades.

The DoubleLine Capital CEO founder and chief investment officer has cut his stock-allocation recommendation to 30% from 40%, suggesting putting it into a single Fortune 500 equal-weighted index instead, he told the Julia La Roche podcast published Wednesday.

Gundlach said he made the switch after two quarters of that bigger stock allocation, moving to an index based on revenue over market capitalization. That helps remove AI-concentration risk, he said.

"If it's 440 [companies] that are in this, you get one 440th of each one. So you don't have 40% of your portfolio in AI. You have almost nothing. You're being as far away from that as you can. So everything that I'm recommending is completely separate from AI exposure," he said.

The rest of his portfolio recommendations are as follows: 30% in fixed income - high-quality bonds and local-currency emerging-market debt - 10% in the DoubleLine Commodity Strategy ETF DCMT, 10% in gold and 20% in so-called "dry powder" - 10% in the DoubleLine Commercial Real Estate Debt ETF DCRE and 10% in a DoubleLine flexible income fund.

"You'll notice that nothing in this mix has anything like AI. There's nothing here," Gundlach said. "I was perfectly fine owning some AI by using other types of equity vehicles, but starting last week, I just want out."

Best known for accurately calling the U.S. housing bust in 2007, he said he worries that "we're past that point where everything's viewed as beautiful," when it comes to the AI trade. For example, he pointed to widening credit spreads for AI-related company debt amid an "insatiable demand" to borrow money for corporations that "won't care if rates go up 200 points."

Gundlach said if SpaceX believes its addressable market is one-quarter of global GDP, there's little room for other companies to capture that growth.

"You're going to have fallout and losers in the AI race for the holy grail. It's going to happen and that's going to be what leads to the next very significant drawdown in risk assets. Are we there yet? Well, I think we're close enough to there that I want to be out of the epicenter of that. I'm not selling everything, I'm not short anything, but I want to be further and further away from the areas that are going to suffer the most," he said.

In a Gundlach Unlocked podcast that aired a week ago, the manager shared a chart showing how the equal-weight S&P 500 index XX:SP500EW has been outperforming the weighted S&P 500 index SPX for about a year and a quarter.

Gundlach didn't specify his equal-weight-index recommendation, but the biggest sector weighting in the DoubleLine Fortune 500 Equal Weight ETF DFVE is a 17%-plus allocation to industrials, with technology at just over 9%. However, there's plenty of AI exposure in the top 10 holdings via Applied Materials (AMAT), Marvell Technology (MRVL) and Palo Alto Networks (PANW).

The investor also said that the market has "crossed over to the hard side of the street" for the next six to nine months, noting that a popular valuation metric, the S&P 500 Shiller CAPE ratio, now sits above 42.

"And any time that it has been 35 or higher, every single time, the forward 10-year return in real terms, so versus inflation-adjusted, has been negative," Gundlach said.

"So if inflation is going to be 2%, if [Fed Chairman] Kevin Warsh is going to guide us to 2% and stay there, that would mean you should expect negative returns on a nominal basis for the next 10 years and there are no exceptions to it."

-Barbara Kollmeyer

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09-17-26 0741ET