Over the last three trading days, tech stocks, particularly in the semiconductor and AI sectors, have seen significant declines, with the Memory names and broader semiconductor complex witnessing sharp downturns. The Nasdaq 100 fell over 3% on July 24, marking its worst session since October 2022, driven largely by concerns around AI monetization and escalating capital expenditures from major companies.
Notably, the AI sector has experienced similar sell-offs previously, linked to fears about monetization timelines and cost structures. In January 2025, Nvidia lost approximately $593 billion in market value due to a competitor’s claim of cheaper AI model training. Current concerns also stem from rising interest rates due to inflation pressures and robust labor market data, further amplifying the selling pressure as investors rotate toward more defensive sectors like real estate and healthcare.
In total, major hyperscalers have collectively guided for $600–700 billion in capital expenditures for AI in 2026 alone, further raising questions about the return on investment in this burgeoning sector amidst signs of overextended market positions.
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