Remember when AI stocks were the golden child everyone wanted to adopt? Well, it looks like the honeymoon phase might be over, and investors are starting to ask some uncomfortable questions at the dinner table.
This week, the market threw a bit of a tantrum over AI valuations, and honestly? It was probably overdue. Here’s what’s got everyone suddenly nervous about their favorite tech darlings.
Michael Burry Woke Up From His Nap (And He’s Not Happy)
You know things are getting spicy when the “Big Short” guy emerges from his two-year social media hibernation to drop cryptic warnings. Michael Burry—yes, the same guy who called the 2008 housing crash while everyone else was still doing the Macarena—posted on X: “Sometimes, we see bubbles. Sometimes, there is something to do about it.”
Plot twist: His firm also placed bets against AI giants Nvidia and Palantir. When the guy famous for being right about bubbles starts shorting your favorite stocks, maybe it’s time to pay attention?
Suddenly Everyone Cares About Math Again
For years, investors have been playing a fun game called “ignore the price-to-earnings ratio because AI is magic.” But this week, reality came knocking with a calculator.
The carnage was real: Nvidia dropped 1.08%, Palantir tanked 8.35%, and Meta fell 1.89%. Even Goldman Sachs CEO David Solomon joined the party, suggesting we might see a 10-20% market correction in the next couple of years. Thanks for the heads up, Dave!
Palantir’s “Good News, Bad Stock” Moment
Here’s where things get weird. Palantir actually beat earnings expectations—revenue hit $1.18 billion versus the expected $1.09 billion. So naturally, the stock dropped 8%. Because apparently, even good news isn’t good enough when your stock has been partying like it’s 1999.
As one analyst put it, “nosebleed valuations got in the way.” Translation: The stock got so expensive that even winning felt like losing.
Meta’s Spending Spree Has Investors Clutching Their Pearls
Meta decided to double down on AI spending, bumping their capex guidance to $70-72 billion this year. That’s billion with a “B”—enough money to buy a small country or several large yachts.
Investors weren’t thrilled. Meta’s stock dropped 14% after the announcement because apparently, there’s a limit to how much cash you can throw at the AI gods before people start asking uncomfortable questions about returns.
Combined with Amazon, Microsoft, Alphabet, and Apple, these tech giants are on track to spend around $349 billion on AI capex this year. That’s more than the GDP of most countries, and investors are starting to wonder if all this spending will actually pay off.
The Reality Check
Look, AI isn’t going anywhere—it’s still transformative technology that’ll reshape everything from how we work to how we accidentally order 47 tubes of toothpaste from our smart speakers. But maybe, just maybe, some of these stocks got a little ahead of themselves.
The market’s basically saying: “We still love you, AI, but let’s talk about your spending habits.” And honestly? That’s probably healthy. Even the best parties need a breather.