Nvidia just delivered a blowout earnings report that should have sent tech stocks soaring. Instead, the AI trade is collapsing. Despite CEO Jensen Huang dismissing bubble talk and reporting "off the charts" chip sales, tech's biggest names are staring down their worst week in months as investors question whether AI valuations have gotten out of hand.
The AI trade just hit a wall, and not even Jensen Huang's charisma could stop the crash. Nvidia delivered exactly what investors wanted Wednesday - record revenue, soaring data center sales, and the CEO's trademark dismissal of bubble concerns. "There's been a lot of talk about an AI bubble," Huang told analysts during the earnings call. "From our vantage point, we see something very different." For a few hours, that confidence lifted the entire sector. Then reality hit. Every member of the Magnificent 7 except Alphabet is now tracking for weekly losses, with Amazon and Microsoft leading the carnage with 6% drops. The irony is brutal - the companies that should benefit most from AI's rise are getting hammered hardest. Oracle, another major Nvidia customer, has slumped 10% as investors question whether massive AI infrastructure spending will ever pay off. The chip sector tells an even grimmer story. Advanced Micro Devices and Micron are staring down 17% weekly losses, while Marvell Technology has dropped 10%. Even quantum computing darlings like Rigetti, IonQ, and D-Wave have shed at least 10%. CoreWeave, which rents out Nvidia's chips in data centers, initially soared on the earnings beat before reversing course for an 8% weekly decline. The selloff reflects growing skepticism about AI's financial returns. Since ChatGPT's launch in late 2022, tech stocks have repeatedly hit new highs on AI promises. But stretched valuations are finally catching up with reality. Bridgewater's Ray Dalio didn't mince words Thursday, telling CNBC the market is "definitely in a bubble." The concerns center on massive capital expenditure booms with little visible payoff. Cloud giants are pouring billions into AI infrastructure, but revenue growth hasn't matched the investment pace. "Big Short" investor recently accused major providers of understating depreciation expenses and overestimating chip lifecycles, calling it "one of the more common frauds of the modern era." Burry has with actual trades, revealing short positions against both Nvidia and . The AI software company is down 11% this week and has lost nearly 25% this month as investors question its lofty valuation. Only has bucked the trend, gaining nearly 8% this week thanks to momentum from its . The search giant is the only Magnificent 7 member on pace for November gains, highlighting how selective this market has become. The timing couldn't be worse for the AI narrative. Just as Nvidia proved its dominance with record results, the broader ecosystem is cracking under valuation pressure. Investors who rode the AI wave to massive gains are now questioning whether the technology can justify the astronomical market caps it has created.
