Deutsche Bank strategist Jim Reid suggests the downturn may indicate an overextension of the recent strong rally, while others, like Wedbush analyst Dan Ives, believe the AI revolution has started and the reaction is just noise. The future of AI companies will depend on their ability to monetize, amidst concerns about the high costs of expanding infrastructure and running data centers.
Key takeaways:
- AI-related companies lost $190 billion in stock market value following disappointing quarterly earnings results by Microsoft and Google's parent company, Alphabet.
- Microsoft's stock dropped by 0.7 percent and Alphabet's dropped 5.6 percent, while AI chip producer AMD also suffered despite a solid quarter.
- Some analysts suggest this could be due to investors becoming wary of tech companies overpromising on AI without a clear path to monetization.
- Others argue it's too early to tell if this is a sign of 'peak AI', and whether the costs of expanding infrastructure to keep up with AI demand are spooking investors.