Introduction
The AI boom that once propelled tech stocks to dizzying heights is showing cracks. Short sellers just pocketed over $5.6 billion in profits as Big Tech and AI-linked stocks stumbled this week. Could this be the start of an AI-driven market correction — or the greatest buying opportunity before the next leg higher?
One of the Best Broker in Europe
European brokers have reported surging activity around AI-linked equities. Traders are increasingly seeking platforms that offer real-time risk management tools, tight spreads, and access to both U.S. and European markets. Among the top performers, brokers with strong AI-driven analytics are positioning themselves as market leaders.
Financial Performance
- Meta (META): -4% over the last five sessions
- Nvidia (NVDA): -3.8%
- Microsoft (MSFT) & Apple (AAPL): -3% each
- Google (GOOG): -1%
- AMD: -10%
- CoreWeave (CRWV): -24%
Short sellers reaped billions, particularly from Meta, which alone accounted for $1.1 billion in short profits over just two trading sessions.
Key Highlights
- Short sellers gained $5.6B in 48 hours.
- AI-linked companies are showing early signs of a valuation bubble.
- 95% of firms studied by MIT’s NANDA project reported no financial returns from AI investments.
Profitability and Valuation
Despite AI hype, valuations remain stretched:
- NVDA trades at a forward P/E above 35, signaling over-optimism.
- Meta’s aggressive AI spending has outpaced revenue returns, raising doubts about ROI.
Debt and Leverage
While Big Tech remains largely cash-rich, heavy AI R&D spending combined with acquisitions increases leverage risk for companies like Meta and Microsoft.
Growth Prospects
AI still offers long-term structural growth across cloud, semiconductors, and enterprise adoption. However, short-term overinvestment and lack of tangible results are cooling investor sentiment.
Technical Analysis
- Nasdaq Composite: Support at 20,800, resistance at 21,500.
- NVDA: Key support at $720, resistance at $820.
- META: Testing support at $460, breakdown could target $430.
Potential Catalysts
- Jackson Hole Symposium: Powell’s stance on rates could impact tech valuations.
- AI Regulation: Growing concerns around U.S. government intervention may weigh on Big Tech.
- Earnings Season: Weak AI ROI disclosures could spark further downside.
Leadership and Strategic Direction
Leaders like Mark Zuckerberg (Meta) and Sam Altman (OpenAI) remain bullish on AI’s future, but cracks in execution and monetization strategies are increasingly visible.
Impact of Macroeconomic Factors
- Higher U.S. Treasury yields (4.31% on 10-yr) are pressuring tech stocks.
- Oil ($62.80) and Gold ($3,366) signal a flight to safe havens.
- A stronger dollar index (DXY +0.03%) further weighs on international tech revenues.
Total Addressable Market (TAM)
The AI TAM remains massive, projected at $1.3 trillion by 2030. But the current disconnect between spending and profitability suggests a possible “AI winter” correction before sustainable growth resumes.
Market Sentiment and Engagement
Fear is rising:
- VIX surged to 15.57 (+3.87%).
- Retail investors are pulling back from AI momentum plays.
- Short interest is accelerating in META, AMD, and CoreWeave.
Conclusions, Target Price Objectives, and Stop Losses
- Short-Term (1–3 months): Nasdaq could fall another 5–8%.
- Target: 20,200
- Stop Loss: 21,800
- Medium-Term (6–12 months): If AI adoption proves real, recovery possible.
- Target: 22,500
- Stop Loss: 19,500
- Long-Term (2–3 years): AI remains transformative.
- Target: 28,000+ Nasdaq if monetization succeeds.
Discover More
For more insights into analyzing value and growth stocks poised for sustainable growth, consider this expert guide. It provides valuable strategies for identifying high-potential value and growth stocks.
We also have other highly attractive stocks in our portfolios. To explore these opportunities, visit our investment portfolios.
This analysis serves as information only and should not be interpreted as investment advice. Conduct your own research or consult with a financial advisor before making investment decisions.
Looking to Educate Yourself for More Investment Strategies?
Check out our free articles where we share our top investment strategies. They are worth their weight in gold!
📖 Read them on our blog: Investment Blog
For deeper insights into ETF investing, trading, and market strategies, explore these expert guides:
📘 ETF Investing: ETFs and Financial Serenity
📘 Technical Trading: The Art of Technical & Algorithmic Trading
📘 Stock Market Investing: Unearthing Gems in the Stock Market
📘 Biotech Stocks (High Risk, High Reward): Biotech Boom
📘 Crypto Investing & Trading: Cryptocurrency & Blockchain Revolution
Did you find this article insightful? Subscribe to the Bullish Stock Alerts newsletter so you never miss an update and gain access to exclusive stock market insights: https://bullishstockalerts.com/#newsletter.
Avez-vous trouvé cet article utile? Abonnez-vous à la newsletter de Bullish Stock Alerts pour recevoir toutes nos analyses exclusives sur les marchés boursiers : https://bullishstockalerts.com/#newsletter.
0 Comments