Tech stocks slip as AI hype meets new doubts

Investors reel as new AI doubts and Altman warnings temper the recent surge in tech names.

Tech stocks fall after Altman warns on AI future and MIT study dims hype

Markets moved lower on Tuesday, with the Nasdaq dropping more than 1.2% as investors reassessed the pace of AI gains. Nvidia slid about 3.5% and Palantir fell nearly 10%, helping lead a broad pullback that spread to overseas markets. The retreat followed an MIT report that 95% of companies investing in generative AI are not seeing returns, and it came after Sam Altman suggested investors may be chasing an AI bubble. The comparison to the dotcom era added fuel to the caution in a rally that had driven up share prices for several AI related firms.

The MIT study argues failures come from learning gaps and flawed integration rather than the quality of AI models, yet the market’s reaction shows ongoing concern about the commercial viability of AI. Across Asia, chipmakers showed mixed signs as some gathered losses while others rose in response to different growth drivers. Analysts note that use cases are still in early stages, and high valuations may not be easily justified if profits lag behind hype.

The pullback marks a shift from hype to scrutiny. Investors want to see real profits, not just potential, from AI investments. The mood is cautious but not uniformly bearish, with some analysts still forecasting long-term gains as AI infrastructure expands.

In the longer view, the debate centers on whether a few AI platforms can sustain rapid growth or if the current prices already baked in too much optimism. The episode tests the market’s ability to separate possible breakthroughs from immediate returns and to tolerate volatility as the AI story unfolds.

Highlights

The AI story is not over, it is evolving under market scrutiny.