A recent report has sent shockwaves through Wall Street, with AI-related stocks experiencing a significant downturn. Nvidia, a major player in AI chip manufacturing, saw its stock sink 3.1%, while Palantir Technologies dropped 9.3%. The decline is attributed to concerns about the sustainability of AI investment growth and potential overvaluation.
Critics argue that stock prices have risen too high, too fast, making them expensive. Investors are questioning whether AI investments will yield sufficient returns to justify current valuations. The S&P 500 fell 0.7% and is on track for a third straight loss, despite being near its all-time high set last week.
Traders expect the Federal Reserve to cut interest rates in September to boost the economy. Meanwhile, OpenAI CEO Sam Altman has expressed concerns about an AI bubble, drawing parallels to the dot-com bubble. He warns that some investors might get "burnt" as the hype unwinds, but believes the long-term value of AI will outweigh short-term losses.
