AI Stocks Melt Down as Nasdaq Slides, OpenAI Delays IPO
- 21 hours ago
- 2 min read
Artificial intelligence stocks melted down again, dragging the tech-heavy Nasdaq to its fifth consecutive losing session as investors rotated out of high-flying technology names and into more defensive corners of the market. The slide has rattled Wall Street and revived a question that had been drowned out by months of euphoria: is the AI trade finally running out of road?
The selling has been broad and persistent. The Nasdaq, the S&P 500 and the Dow have all wobbled as worries mount about ballooning AI costs and whether the spending will ever translate into the profits investors have priced in. The core anxiety is simple: AI valuations have been built largely on the technology's promise rather than the bottom-line earnings growth that typically fuels durable stock gains.
That tension boiled over in recent weeks. The industry's explosive growth has forced companies to spend and borrow tens of billions of dollars on data centers, chips and infrastructure without the immediate results to show for it. As capital expenditures soar, skeptics argue the math no longer works, and even modest disappointments are now triggering outsized punishment in share prices.
Individual names tell the story. Broadcom beat fiscal second-quarter expectations, but its guidance of roughly 16 billion dollars in AI chip sales fell short of the 17.2 billion analysts wanted, and the company declined to raise its full-year AI semiconductor forecast. The "sell-the-news" reaction was brutal, sending Broadcom shares sharply lower and dragging the rest of the chip sector down with it.
The pain has spread beyond semiconductors. Apple said it would raise prices on MacBooks and iPads to offset a severe memory shortage, a move that sent its stock tumbling more than six percent as investors fretted over margins and demand. The memory squeeze cuts both ways, however: chipmaker Micron surged after reporting stellar earnings driven by booming demand for AI memory, a rare bright spot in an otherwise jittery tape.
Perhaps the loudest alarm bell is coming from the IPO pipeline. OpenAI is reportedly considering delaying its hotly anticipated public offering because of the market volatility, which could make it difficult to fetch the roughly one-trillion-dollar valuation the company has targeted. A delay from the sector's marquee name would be a striking signal that even AI's biggest players are wary of the current climate.
Analysts remain split on whether this is a healthy correction or the start of something larger. Bulls argue the long-term AI buildout is real and that pullbacks are buying opportunities, pointing to genuine revenue growth at leaders like Nvidia and Micron. Bears counter that the gap between spending and returns is unsustainable and that a broader repricing of richly valued tech could still be in its early innings.
For now, caution rules. With earnings season looming and the Federal Reserve weighing its next move amid stubborn inflation, traders are bracing for more turbulence. Whether the AI trade stabilizes or unwinds further, the message from this week's market is unmistakable: the era of buying anything labeled AI without scrutiny appears to be over, and Wall Street is finally asking hard questions about the bill.
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