The cracks in the Artificial Intelligence (AI) sector rattled the US stock market last week. AI stocks like Nvidia, AMD, Oracle, and Super Micro Computer faced a heavy sell-off in November. The bubble is facing reality as investors are concerned about the heavy investments in the sector. Despite the large investments, the technology is yet to make substantial inroads.
Among the price drops in the AI stocks, Super Micro Computer plunged nearly 25% last week. In addition, AMD plummeted close to 10% in the charts while Oracle’s stock fell 9.7%. Nvidia also dipped 9.6% and the overall AI sector erased $820 billion worth of investments. The sell-off also hit Broadcom, Meta Platforms, and Amazon, losing 6.2%, 5.5% and 4.4%, respectively.
Only Apple and Alphabet’s stock dipped less than 1% last week. Traders did not spare Amazon in November, even with strong revenues, citing the increased spending in AI. The company plans to spend $100 billion in capital expenditures to develop artificial intelligence. AI stocks are now under the spotlight for their increased spending and meager returns.
Are AI Stocks Really In a Bubble?
Leading global investment bank Goldman Sachs said that the AI sector is not in a bubble yet. “We do not think we’re in a bubble, and we pay very close attention to that,” said Brittany Boals Moeller, region head of Goldman Sachs, to Fortune. The statement assures investors that AI stocks still have mileage and could soar further.
Gen Z and the upcoming generation will be heavily dependent on AI technology. “Will there be some winners and losers from AI? Absolutely,” she said. “There will definitely be some places where valuations are overblown, and time will tell where those spaces are. So it’s smart for clients to be diligent about how they’re investing in AI,” stocks, she summed it up.