A wave of selling across technology stocks is intensifying fears that the artificial intelligence spending boom may not deliver the returns investors have been counting on.
The tech-heavy Nasdaq Composite fell approximately 2% on Tuesday afternoon as major AI-related names continued their decline for a second consecutive session.
Nvidia and Alphabet, two of the most prominent AI-linked stocks, were both down for a second straight day, reflecting growing unease across the sector.
The steepest single-day loser was chipmaker Micron Technology (NASDAQ: MU), whose shares plummeted 12% ahead of the company’s closely watched earnings results expected on Wednesday.
Micron’s dramatic swing is being seen as a symbol of the broader tension gripping markets, having surged roughly 800% over the past year on surging demand for memory chips tied to the AI buildout.
Gil Luria, head of technology research at investment firm D.A. Davidson, captured the market’s conflicted mood precisely when he described the swings investors are navigating.
“The market just continues to oscillate between ‘AI is going to be great and increase productivity and all these companies are going to win,’ and ‘AI is a big waste of time and it’s not worth the return on investment at all and this is all one big bubble,'” Luria said.
The scale of AI investment globally has been staggering, with Stanford University’s AI Index Report recording more than $580 billion in corporate AI investment in the past year alone, on top of over $1 trillion in the four years prior.
Despite that historic level of spending, markets are growing impatient for evidence of meaningful financial returns from the technology.
Mark Vena, CEO of SmartTech Research, put the question bluntly, saying “The market is trying to kind of digest all this and saying, ‘Are we going to start to see returns?'”
Monday’s session saw Alphabet stock fall 5%, while SpaceX shares dropped a dramatic 16%, amplifying the sense that investors are reassessing the valuations underpinning the AI trade.
The selloff spread well beyond American markets, with Korean stocks taking a significant hit as Samsung and competitor SK Hynix each fell 12% apiece.
Intel and Advanced Micro Devices were both off more than 5% on Tuesday, adding to what amounted to a broad rout across the global semiconductor sector.
Analysts say Micron’s forthcoming earnings are being treated as a bellwether, with investors watching closely for any signal that the AI investment cycle remains on track rather than cooling.
The turbulence arrives at a particularly sensitive moment, as OpenAI and Anthropic are both reportedly considering public stock offerings that could rank among the largest IPOs in market history.
Both companies are generating revenue, but whether generative AI can achieve sustained, long-term profitability remains a deeply open question that markets are increasingly unwilling to ignore.
