Is the AI bubble finally bursting? Why Big Tech stocks are bleeding globally

Major technology stocks are witnessing a sharp decline globally which has put the once-booming tech sector under pressure. According to a post shared by financial commentary publication The Kobeissi Letter on X, several major tech stocks have entered bear market territory. Some have lost more than 60 per cent of their value. Qualcomm shares have reportedly fallen 43 per cent, while Nvidia has seen its stock decline by 25 per cent. The Kobeissi also pointed out that the S&P 500, a stock market index that tracks the performance of 500 large publicly traded companies listed on stock exchanges in the US, has lost around $4 trillion in market value since October 6. 

Several tech stocks are in bear market territory

According to the list shared by The Kobeissi Letter on Thursday, SanDisk has witnessed the biggest fall, with its stock down 66 per cent. Arm Holdings follows with a 64 per cent decline, while Coinbase has dropped by 63 per cent. Other major companies have also taken a hit. Marvell Technology stocks have also fallen by 59 per cent. ServiceNow has lost 57 per cent and Oracle shares have declined 56 per cent. Super Micro Computer is down 51 per cent. Meanwhile, Micron and Dell have also suffered losses of 48 per cent and 47 per cent, respectively.

Nvidia, AMD and other tech giants are also facing decline

Stock values of leading chipmakers and AI companies have also faced a shared decline. Qualcomm shares have fallen 43 per cent, while Broadcom has witnessed a 41 per cent decline. Semiconductor company AMD has suffered a 39 per cent decline. Alphabet and Tesla have both lost 32 per cent of their value.

TSMC is facing a 28 per cent decline. Meanwhile, stock values of Meta and cybersecurity company CrowdStrike have fallen by 26 per cent. Nvidia, one of the biggest beneficiaries of the AI boom, has also seen its stock decline by 25 per cent.

Why Big Tech stocks are bleeding

The sharp decline in technology stocks is likely driven by growing concerns over the massive amount of money companies are investing in AI. Over the past few years, major tech companies have spent billions of dollars building data centres and buying advanced AI chips.

However, investors have been questioning whether these investments will generate enough revenue and profits to justify the spending. According to a November 2 report by Wells Fargo Investment Institute, investors are becoming concerned about higher-than-expected capital expenditure by major tech companies and the impact it can have on their free cash flow. 

The fall in stocks does not necessarily mean that demand for AI is declining or that the AI boom has ended. Instead, investors appear to be reassessing company valuations and want stronger evidence that massive AI investments can translate into sustainable profits.

Note: Stock prices fluctuate in real time, and the figures mentioned above can change depending on market movements.