Tech stocks set for big losing week as AI names get rocked after Nvidia earnings

This week has proven challenging for technology stocks, particularly those linked to artificial intelligence, after Nvidia's CEO, Jensen Huang, attempted to quell concerns about an AI bubble. During a recent earnings call, Huang described the company’s chip sales as 'off the charts' and rejected the notion of an impending bubble. Initially, his optimistic outlook seemed to buoy the market. However, the enthusiasm quickly faded, leading to significant declines for many AI-focused stocks. Among the so-called Magnificent 7 tech companies, only Alphabet managed to escape the downturn, while Nvidia, Amazon, and Microsoft were among the hardest hit, each facing losses around 6% this week. Conversely, Alphabet’s stock has surged nearly 8%, bolstered by the successful launch of its Gemini 3. Oracle, another significant customer of Nvidia, also suffered, experiencing a drop of about 10%. The fallout extended to chip stocks in general, with Advanced Micro Devices and Micron projected to lose 17%, and Marvell Technology down approximately 10%. Companies in the quantum computing sector, including Rigetti, IonQ, and D-Wave, reported at least 10% declines as well. CoreWeave, which utilizes Nvidia’s chips in data centers, initially saw a rise following the earnings report but subsequently experienced an 8% drop. As anticipation grew for Nvidia's earnings, some investors were hoping it would ease fears regarding the stability of AI investments. Despite the surge in stocks since the launch of ChatGPT in late 2022, apprehension has grown as tech valuations stretch thin. Major investors, like Ray Dalio from Bridgewater, have expressed concerns that the market is in a bubble, highlighting a surge in capital expenditures for AI without clear returns. Notably, investor Michael Burry has raised alarms, accusing some cloud and infrastructure companies of misrepresenting their financials. This week, shares of Palantir, which provides AI solutions for government and business sectors, have plummeted by 11%, losing nearly a quarter of their value this month. As tech stocks navigate this turbulent period, the implications of Nvidia's earnings and the broader market sentiment surrounding AI investments remain to be seen.