The AI-fueled rally in US technology stocks has hit a wall, with the Nasdaq Composite dropping over 2% as investors begin demanding returns on massive infrastructure spending.
This downturn followed a similar pattern, with a prior 4.2% Nasdaq decline in early June also tied to cooling AI enthusiasm. The sell-off concentrated in core AI infrastructure stocks like Nvidia, Broadcom, and Micron, with Asian chip giants Samsung and SK Hynix also plunging.
The core concern is market concentration. Seven companies represent roughly 30% of the S&P 500's value, meaning a shift in AI sentiment directly pressures the broader index.
Looking ahead, analysts warn of a developing credit risk. AI-related corporate borrowing could exceed $500 billion by 2026, raising questions about balance sheet health if the promised revenue growth from AI applications fails to materialize.