Growing 'AI Bubble' Debate in the U.S.: Sell-off Continues for NVIDIA and Palantir

Altman: "Investors Are Overly Excited About AI"

MIT: "95% of AI Models Fail to Generate Profits"

Nasdaq Rises Over 40% Since April

Some Analysts Say the Market Is Taking a Breather

Skepticism is spreading over whether the artificial intelligence (AI) boom that has driven the stock prices of tech companies since 2023 might actually be a bubble. On the 19th (local time), the Nasdaq index in New York closed at 21,314.95, down 1.46% from the previous day. Consecutive pessimistic reports about the AI industry have fueled investors' appetite to sell. The previous day, a research team from the Massachusetts Institute of Technology (MIT) released a report indicating that only 5% of AI pilot programs created value worth millions of dollars, while the remaining 95% failed to generate any profits. The analysis highlights that while companies are using custom AI tools, the majority of AIs are not providing tangible benefits. According to Stanford University, private AI investment in the U.S. more than doubled from $47.4 billion in 2022 to $109.1 billion last year.

Adding to this, Sam Altman, CEO of OpenAI, sparked further concern among investors by suggesting there might be a bubble in the AI industry. In a recent interview with tech media outlet The Verge, he said, "It is true that investors are overly excited about AI," noting that "the valuations of AI companies are already out of control."

Following these comments, major tech companies with a market capitalization over $1 trillion such as NVIDIA (-3.5%), Broadcom (-3.55%), and Microsoft (-1.42%) all declined on the day. AI defense contractor Palantir, which had recently reported strong earnings, also plunged 9.35% from the previous day, continuing its five-day losing streak. The Financial Times (FT) reported, "The emergence of China's DeepSeek in January raised questions about the dominance of American firms in the AI market and semiconductor demand," and added, "Although stock prices have recovered, this case clearly shows how sensitively investors react to negative news about AI."

Some believe that after hitting its lowest point in April, the over-40% rally in the Nasdaq index is now pausing to catch its breath. Optimism around AI remains as well. Dan Ives, Head of Global Technology Research at Wedbush Securities, told Fortune in an interview, "The AI revolution will drive a bull market for tech stocks for the next 2-3 years," adding, "This is a '1996 opportunity', not a '1999 collapse.'"

Reporter Han Gyeongjae hankyung@hankyung.com