If a Bear Market Is Coming, 2 Stocks You Don't Want to Own -- and 1 You Do
2026-08-05 10:15
•Johnny Rice •The Motley Fool
••••• •••••• Axe Cap view
If a Bear Market Hits, Avoid This AI Debt Trap, Lean on Berkshire
Oracle and CoreWeave carry heavy AI-related debt risks, while Berkshire Hathaway offers a safe harbor with cash reserves.
South African investors should watch developments in AI closely, but the local market is not immune to global shocks. Oracle’s massive debt and reliance on AI infrastructure contracts—especially with OpenAI—make it risky if the AI spending spree stalls. CoreWeave’s business model is even more fragile, dependent solely on AI rentals and carrying a debt load that outstrips its cash, which spells trouble in a downturn. On the other hand, Berkshire Hathaway sits on a colossal cash pile of around $400 billion, ready to snap up quality assets cheaply if a bear market arrives. For JSE participants, this signals caution on tech-related exposure, especially offshore AI plays, and a preference for cash-rich counters or those with strong balance sheets. Watch the USD/ZAR, as a weaker rand will exacerbate offshore earnings pressure for local companies. The risk here is that AI demand continues growing strong, rendering debt concerns overblown and causing a market rally instead. this is just our opinion and not financial advice
Avoid Oracle and CoreWeave due to their precarious finances and AI dependence. Consider increasing cash holdings or safest local large caps like Standard Bank or Sasol, which benefit from higher commodity prices and currency effects. Alternatively, keep an eye on USD/ZAR for currency-driven entry points.
- ORCL
- CRWV
- BRK.B
- USD/ZAR
- AI spending remains robust, reducing debt risk fears
- Rand strengthens sharply, relieving offshore earnings pressures
6/10
The article warns that if a bear market occurs, it will likely stem from troubles in the AI sector. Oracle and CoreWeave are flagged as risky due to massive debt loads and heavy reliance on AI spending, particularly OpenAI. Berkshire Hathaway is recommended as a defensive hedge with $400 billion in cash to capitalize on market downturns.
Our take is based on reporting first published by The Motley Fool.