Has the artificial intelligence “bubble” burst? Nvidia, AMD, and Samsung lose hundreds of billions

On November 5, the US stock market saw one of the sharpest sell-offs in recent months. The Nasdaq plunged 5.52 percent, entering correction territory, while the Dow Jones lost 1,833 points in a single day. The blow to artificial intelligence and microchip manufacturing companies was particularly severe. But the main question rattling the market is simple: can the massive investments pouring into the AI sector deliver the expected returns?

The sharp decline in New York stock trading also impacted global financial markets. Investors began mass-selling shares of tech giants, and securities of chip manufacturers plummeted by double-digit percentages.

This situation was linked to political uncertainty following the US midterm elections, new concerns regarding artificial intelligence infrastructure, and the massive expenditures of technology companies.

According to Reuters and the Associated Press, major US stock indices fell sharply on November 5. It was one of the worst trading days for the Nasdaq in 19 months.

How much capital was lost on Wall Street in one day?

As of the close of trading on November 5, major US stock indices recorded the following results:

• Nasdaq Composite — fell 5.52 percent to 24,315 points;

• Dow Jones Industrial Average — dropped 1,833.06 points, or 3.44 percent, closing at 51,523.06 points;

• S&P 500 — fell 4.36 percent to reach 7,353.73 points;

• Russell 2000 — declined by 4.45 percent.

The situation with the Nasdaq index, in particular, drew investor attention. It fell more than 10 percent below its record level set in October. This means that a state known as a “correction” has occurred in the stock market.

The market value of major companies also shrank by a huge amount. The capitalization of companies in the S&P 500 decreased by nearly $3 trillion. Losses in the Nasdaq-100 index were estimated at approximately $2.3 trillion.

The “Magnificent Seven,” which brings together the largest technology companies in the market, also took a hard hit. Their total market value shrank by more than $1 trillion.

Nvidia alone lost $374 billion

The primary targets of this sell-off were companies that manufacture microchips and data center infrastructure necessary for artificial intelligence technologies.

One of the biggest losses fell on Nvidia. Shares of the company, considered one of the main beneficiaries of the artificial intelligence revolution, fell 9.26 percent in a single day. As a result, its market value decreased by approximately $374 billion.

Other chip manufacturers could not escape the sharp decline either:

• Micron shares — by 17.46 percent;

• AMD shares — by 17.26 percent;

• Broadcom shares — by 10.43 percent;

• SanDisk shares — fell by 22.26 percent.

The Philadelphia Semiconductor Index (SOX), which tracks the semiconductor industry, also fell by more than 12 percent.

These figures show that investors were in a hurry to pull their funds not just from one or two companies, but from the entire sector related to AI infrastructure.

What scared investors: is the AI bubble bursting?

One of the important reasons for the sharp changes in the market was the results of the midterm elections held in the US on November 3.

The Democratic Party's capture of control over both houses of Congress raised concerns among investors that regulatory measures regarding the artificial intelligence sector could be strengthened.

Potential restrictions on the construction of data centers, in particular, caused serious concern among market participants.

The reason is that such centers provide the massive computing power necessary for the operation of artificial intelligence systems. They require a great deal of electricity, cooling systems, servers, and microchips.

If the construction of new data centers slows down or obtaining permits for them becomes difficult, this could affect the entire technological chain. Companies ranging from chip manufacturers like Nvidia to suppliers of electricity and server equipment are likely to suffer from this.

Furthermore, investor expectations regarding the AI sector began to be re-evaluated.

In recent years, technology companies have announced plans to spend hundreds of billions of dollars on artificial intelligence infrastructure. However, how quickly and to what extent these investments will generate returns remains one of the main questions in the market.

Some experts note that share prices may have moved far ahead of the companies' actual financial results. For this reason, the decline in shares of AI-related companies can be assessed as a revision of overly high expectations in the technology sector.

Panic spread to Asian markets as well

The sharp sell-offs in the US also put pressure on shares of technology companies in Asia.

Losses were observed, especially in markets dependent on chip manufacturing and the export of high-tech products.

In trading on November 6, South Korea's Kospi index fell by nearly 6 percent, and Taiwan's TAIEX index fell by 4.6 percent. Japan's Nikkei 225 index also lost approximately 6 percent.

In South Korea, the decline in shares of Samsung Electronics and SK Hynix put pressure on the market. In Taiwan, concerns grew regarding TSMC, one of the world's largest contract microchip manufacturers.

This situation once again demonstrated that changes in the artificial intelligence market affect not only US technology giants but the entire global chip manufacturing chain.

Investors are looking for safety, but the situation in the market is not yet stable

During periods of sharp sell-offs in the stock market, investors usually exit stocks and focus on assets considered relatively safe.

This time, too, demand for US government bonds was observed to increase. At the same time, changes occurred in commodity markets. On November 5, the price of Brent crude oil rose by approximately 4.6 percent, and WTI oil by 3.35 percent.

Sharp fluctuations in the market were also reflected in the VIX volatility index. Some trading data recorded that the index increased by nearly 70 percent in a single day. This shows how much anxiety and uncertainty have increased among investors.

However, a partial recovery was observed in the US market on November 6: the Nasdaq grew by 1.1 percent, and the S&P 500 by 0.3 percent. The Dow Jones continued to fall by 0.5 percent. Thus, despite a one-day recovery, weekly results remained negative for the major indices.

Is this a simple correction or the beginning of a larger crisis?

For now, there is insufficient basis to assess this decline in the US stock market as the beginning of a new financial crisis. However, the event was a serious warning for investors.

The massive investments being made in the artificial intelligence sector, the construction of data centers, the demand for electricity, and the future earnings of technology companies may now be evaluated more scrupulously.

Most importantly, the events in the market showed one truth: even the world's largest and most influential technology companies can remain vulnerable to political decisions, economic expectations, and investor sentiment.

Artificial intelligence is likely to remain one of the most important technologies of the future. But this does not mean that the stock of every company in this sector will always increase in value. Now, the main criterion for investors is not just the prospect of the technology, but when and how the billions being spent will turn into real profit.