Semiconductors, AI (Artificial Intelligence), GPUs and chips were once thought to be niche tech terms, but they're at the center of global investor attention. However, the excitement seems to be cooling off a bit.
NASDAQ, the barometer for the tech sector, witnessed a decline of nearly 1.78 per cent on Friday. Even NVIDIA, the standout star of the US stock market, fell by nearly 6 per cent this week.
The larger pessimism came after lower-than-expected job market data coupled with the subdued quarterly performance of some companies disappointed the Wall Street.
Nasdaq Composite declined by more than 10 per cent from its recent all-time high on July 10, pushing the tech-heavy index into correction territory.
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Recently, an American Hedge Fund, Elliott Management said that Nvidia stock is in a "bubble" and the investors of the stock are in a "bubble land," thanks to the rally driven by AI hype. As per a report by the Financial Times, the company said that AI is “overhyped with many applications not ready for prime time."
But there is more to what got the bears dominating the Wall Street on Friday. Amazon and Intel were among the biggest losers as lower-than-expected forecasts took over the investor sentiment.
The AI hype has been all over the market for the better part of an year now and investors are keen not to miss out. They have been pouring money heavily into the market, making bets on the AI hype and hoping for big returns.
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NVIDIA, the star of Wall Street, initially showed that the AI hype might be more than just plain hype after the chip-making company released its results for the quarter ending March.
However, concerns about valuations are still very much on the table. Companies are throwing a lot of resources into their AI projects, but there’s a growing sense of concern that markets might be aligning the stars of capitalising AI just way too soon.
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