The AI-related stock market has seen significant fluctuations recently. The SOXX/IGV ratio dropped 19.95% month-to-date, marking the worst month in its history, as investors question the sustainability of AI capital spending by hyperscalers like Microsoft, Amazon, Alphabet, and Meta. Nvidia Corp. bucked the trend, rising 3.65%, while software stocks saw a 4% increase.
Despite a positive inflation report, Wall Street experienced a significant selloff in AI-related stocks, with the technology sector slumping 5.2% for the week. The iShares Semiconductor ETF was down nearly 18.5% month-to-date, and IBM's stock plummeted 25.2% after preannouncing its second-quarter results.
The selloff has created buying opportunities for investors, with five stocks showing accelerating revenue growth and expanding margins: SpaceX Technologies Inc., TeraWulf Inc., Amazon.com, Inc., Palantir Technologies Inc., and Micron Technology Inc. Samsung Electronics Co. Ltd.'s preliminary operating profit jumped 19 times year-over-year, driven by AI memory demand.
Microsoft's stock rose 2.9% as the company prepares its sales team to compete with Anthropic and OpenAI, emphasizing its lower costs, stronger security controls, and broader product offering. AMD's stock is considered overvalued by Wall Street analysts, but its strong position in the server CPU market could drive growth amid the agentic AI boom.
In other news, San Francisco's attorney general has ordered Apple and Google to remove AI-powered 'nudification' apps, and companies are experimenting with cheaper Chinese AI models to reduce costs. Bank of America's AI investment is starting to pay off, with improved efficiency ratios and returns.
Key Takeaways
- Microsoft, Amazon, Alphabet, and Meta are seeing questions about the sustainability of their AI capital spending.
- Nvidia Corp. is up 3.65%, while software stocks have seen a 4% increase.
- The iShares Semiconductor ETF is down nearly 18.5% month-to-date.
- IBM's stock plummeted 25.2% after preannouncing its second-quarter results.
- Five stocks showing accelerating revenue growth and expanding margins include SpaceX Technologies Inc., TeraWulf Inc., Amazon.com, Inc., Palantir Technologies Inc., and Micron Technology Inc.
- Microsoft is preparing its sales team to compete with Anthropic and OpenAI.
- AMD's stock is considered overvalued, but its strong position in the server CPU market could drive growth.
- San Francisco's attorney general has ordered Apple and Google to remove AI-powered 'nudification' apps.
- Companies are experimenting with cheaper Chinese AI models to reduce costs.
- Bank of America's AI investment is starting to pay off with improved efficiency ratios and returns.
Chip Stocks Plummet as AI Trade Unwinds
The chip stock market has seen a significant downturn, with the SOXX/IGV ratio dropping 19.95% month-to-date, marking the worst month in its history. This decline is attributed to investors questioning the sustainability of AI capital spending by hyperscalers like Microsoft, Amazon, Alphabet, and Meta. Nvidia Corp. is up 3.65%, bucking the trend, while software stocks have seen a 4% increase. The selloff has affected chip stocks, with the median component losing 22.42%.
AI Selloff Hits Wall Street
Wall Street experienced a significant selloff in AI-related stocks despite a positive inflation report. The technology sector slumped 5.2% for the week, with the iShares Semiconductor ETF down nearly 18.5% month-to-date. IBM's stock plummeted 25.2% after preannouncing its second-quarter results, revealing a revenue miss and a shift in client spending towards AI hardware. Memory chip stocks, including SanDisk Corp. and Western Digital Corp., also saw significant declines.
Cheap AI Stocks to Buy
The AI infrastructure selloff has created buying opportunities for investors. Five stocks, including SpaceX Technologies Inc., TeraWulf Inc., Amazon.com, Inc., Palantir Technologies Inc., and Micron Technology Inc., show accelerating revenue growth and expanding margins. Samsung Electronics Co. Ltd.'s preliminary operating profit jumped 19 times year-over-year, driven by AI memory demand, supporting the case for buying these cheap AI stocks.
Weekly Recap: NinjaTrader-Alpha Futures Split
The retail prop trading industry faced scrutiny after a commercial dispute between NinjaTrader and Alpha Futures sparked debate about infrastructure dependence and operational resilience. FundedNext launched a Model Context Protocol server, allowing traders to connect their accounts with AI assistants like ChatGPT, Claude, and Gemini. The integration provides read-only access to account information without allowing AI to execute trades or modify account settings.
Wall Street Says AMD Is Overvalued
Wall Street analysts believe AMD's stock is overvalued, but there is a strong bullish argument due to rising demand for processors amid the agentic AI boom. AMD is a leader in the server CPU market, positioning it to profit from the growing demand for AI agents. Despite trading at 79.4x forward earnings, AMD's stock could still see significant growth, mirroring Nvidia's performance in recent years.
Microsoft Stock Rises as AI Sales Push Targets OpenAI and Anthropic
Microsoft's stock rose 2.9% as the company prepares its sales team to compete with Anthropic and OpenAI. Microsoft will emphasize its lower costs, stronger security controls, and broader product offering. The strategy supports Microsoft's effort to position itself as a platform for businesses to fine-tune, deploy, and monitor artificial intelligence across their operations.
AI Stocks Accelerate Losses
The sell-off of AI stocks accelerated as New York markets opened, with Nvidia falling 3.3% and Intel down 4.3%. The tech giants' stocks have been under pressure since their quarterly earnings reports revealed a decline in sales. The sell-off has raised concerns about a broader decline in the tech sector.
San Francisco Orders Apple and Google to Remove AI-Powered Nudify Apps
San Francisco's attorney general has sent cease-and-desist letters to Apple and Google, demanding the removal of 13 'nudification' apps that can transform ordinary photos into explicit images. The apps allow bad actors to create and distribute explicit content, and the city has given the companies 30 days to comply with the demand.
Companies Experiment with Cheaper Chinese AI Models
Companies are experimenting with cheaper Chinese AI models to reduce costs. Qilai Shen, a Bloomberg/Getty Images photo, shows DoorDash turning to Chinese AI companies like Alibaba and DeepSeek to cut AI costs. The shift comes down to cost, capability, and the availability of open-source models.
Bank of America's AI Investment Pays Off
Bank of America's AI investment is starting to pay off, with the company's CFO saying AI-enabled productivity is showing up in efficiency ratios and returns. The bank's efficiency ratio improved to 59%, a roughly 360 basis point improvement from last year.
Parkland Man Arrested for AI-Generated Child Porn
A Parkland man was released on bond after being arrested for AI-generated child pornography. The case began after a cyber tip was submitted through Grok, an AI chatbot developed by xAI and integrated into X, the social media platform formerly known as Twitter.
AMD and Palantir Stock Performance
AMD's stock price has skyrocketed, while Palantir's stock price has plummeted. Despite the vastly different performances, a model gives both companies the same rating and confidence score. The disparity in performance raises questions about what's driving it and what it means for investors.
Sources
- Chip Stocks' Worst Month Ever Vs Software: Is the AI Trade Over?
- AI Selloff Hits Wall Street Despite Best Inflation News - IBM (NYSE:IBM), VanEck Semiconductor ETF (NASDA
- Why These Cheap Artificial Intelligence (AI) Stocks Are Still a Buy Despite the Selloff
- Weekly Recap: NinjaTrader-Alpha Futures Split; FundedNext Brings AI to Prop Trading
- Wall Street Says This Artificial Intelligence (AI) Stock Is Overvalued. Here's Why I Disagree
- Microsoft Stock Rises 2.9% as AI Sales Push Targets OpenAI and Anthropic
- Sell-off of AI stocks accelerates as New York markets open
- San Francisco orders Apple, Google to remove nudify apps from app stores
- Businesses are experimenting with cheaper Chinese AI models as U.S. rivals get more expensive
- Bank of America’s AI bet is starting to pay off, its CFO says
- Parkland man released on bond after arrest for AI-generated child porn; Experts warn over deepfakes
- Two AI Stocks, Two Price Targets: What’s Next for AMD and Palantir
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