Even Nvidia head Jensen Huang was unable to support the technology and AI market this week.
The chip behemoth’s revered chief heralded “exceptional” chip sales and refuted claims of an “AI bubble,” and for a time, the current raised all vessels.
“There’s been considerable chatter regarding an AI bubble,” Huang stated during an earnings call this week. “From our perspective, we perceive something quite different.”
The excitement from the outstanding earnings report swiftly turned, plunging the AI stars into negative territory — and few winners emerged unhurt.
All representatives of the Magnificent 7, with the exception of Alphabet, experienced a losing week, with Nvidia, Amazon and Microsoft facing the most significant declines.
Amazon and Microsoft spearheaded the decline in the group, dropping 6% and 7% this week, respectively. In contrast, Alphabet climbed 8%. The search titan is also the sole mega-cap in the group likely to see gains in November, bolstered by the rollout of Gemini 3.
Oracle, another significant Nvidia partner, plummeted around 11%. The chipmaker also provides services to major model developers like OpenAI and Anthropic.
Chip equities have also fallen amid the broader disarray in the technology sector. Advanced Micro Devices and Micron each dropped more than 16%, while Marvell Technology sank 10%. Stocks related to quantum computing IonQ and D-Wave decreased by more than 11% and 13%, respectively.
CoreWeave, a company that purchases and leases Nvidia’s chips in data centers, initially surged on the chipmaker’s earnings report, but quickly turned around. This company’s stock fell by 7% this week.
The enthusiasm for AI was waning leading up to Nvidia’s earnings announcement on Wednesday, as investors looked to this report to mitigate anxieties that the AI bubble was unstable. Since the unveiling of ChatGPT in late 2022, the stock has contributed to driving the market to unprecedented highs.
However, worries have escalated in recent weeks as technology stocks experience inflated valuations.
High-profile investors, including Bridgewater’s Ray Dalio, informed CNBC on Thursday that the market is certainly in a bubble.
Many of the concerns stem from a surge in capital expenditures aimed at supporting AI, with limited evidence of returns visible for many market players.
Investor Michael Burry recently claimed that some of the largest cloud and infrastructure firms were minimizing depreciation costs and projecting longer operational lifespans for their chips, labeling it “one of the more frequent frauds of the contemporary age.”
Earlier this month, Burry disclosed positions against Nvidia and Palantir.
Shares of the software analytics company, which offers AI solutions to the government and businesses, tumbled 11% this week. The stock has lost nearly 25% of its value this month.
