AI Stocks Lead Tech Retreat as Nasdaq Eyes Worst Week Since April
Nvidia, Super Micro Computer, and other sector leaders fall sharply as investors take profits amid growing concerns over lofty valuations and potential market overheating.
A fierce sell-off in artificial intelligence and semiconductor stocks intensified on Friday, pushing the tech-heavy Nasdaq 100 toward its most significant weekly loss since April. The downturn signals a rapid shift in sentiment as investors take profits from the market's most celebrated sector amid rising concerns about stretched valuations and the sustainability of its meteoric rise.
Shares of Nvidia (NVDA), the bellwether for the AI boom, fell approximately 2.9% in Friday trading to $182.68. The drop extended a painful week for the chipmaker, which has seen more than 7% of its value erased over the past five sessions. The selling pressure was even more pronounced for other high-flyers in the sector. Super Micro Computer (SMCI), a key provider of AI-focused servers, has plummeted more than 22% this week, reflecting broad-based risk aversion.
The retreat is not isolated to a few names. Other major players, including AMD and Palantir, also suffered their steepest declines in months, underscoring the breadth of the sector's pullback. The selling pressure has been a primary driver of the Nasdaq Composite's 2.8% decline over the last five trading days, putting the index on track for its worst weekly performance in over six months.
Analysts point to a confluence of factors driving the reversal. After a year of explosive gains, many investors are choosing to lock in profits. This tactical move is compounded by a growing debate over whether the AI sector has entered bubble territory. Concerns about an 'AI bubble' have moved from the fringes to the forefront of investor discussions, prompting a re-evaluation of the premium valuations assigned to AI-linked companies.
Adding to the anxiety are fundamental and geopolitical headwinds. Reports of new, more efficient AI models that require less powerful hardware have raised questions about the long-term demand for the most advanced chips. Simultaneously, the prospect of tightened U.S. export restrictions on AI technology to China continues to cast a shadow over the industry's global growth prospects.
The speed of the reversal serves as a stark reminder of the volatility inherent in technology-driven markets. While the long-term transformative potential of artificial intelligence remains a consensus view, the current sell-off suggests the path forward will be fraught with significant corrections. As one market report noted, the dominant theme is risk-off sentiment, with market participants questioning whether the massive capital investments in AI infrastructure will generate sufficient returns.
Despite the week's bruising losses, Nvidia's stock remains up significantly year-to-date, and its long-term outlook is still viewed favorably by many on Wall Street, with an average analyst price target of $229.67. However, the current downturn is forcing a necessary reality check, as the market grapples with separating sustainable growth from speculative frenzy.