AI chip maker Nvidia, the world’s most valuable company, blew away analysts’ expectations this week. Posted A massive 73 percent increase in fourth quarter revenue.
But then something strange happened: Nvidia shares fell more than five percent after the announcement. bloomberg reportsThis is the biggest one-day decline since mid-April.
It was a shocking response to a financial slam dunk, highlighting fears that the huge amounts of money the AI ​​industry is pouring into building huge data centers across the country may not be sustainable. Tech leaders continue to warn that it could still take years if returns ever materialize, while costing billions of dollars each quarter.
Till Friday the situation was not looking very good. The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite declined as fears grew about the impact of AI on the economy. All three indices are in the red for February, indicating continued widespread uncertainty. Overall, the S&P 500 and Nasdaq Composite are on the rise Experience their worst month since March 2025.
As cnbc tellsTwitter co-founder Jack Dorsey’s fintech company, Block, announced on Thursday He is laying off about half his staff, citing AI advancements. The move is being seen as an expression of fears that AI automation could soon lead to a decline in employment numbers, which could have serious economic consequences in the long run. (While Wall Street indices fell, the bloc’s stocks painted a grim picture of the broader economy shot in the news.)
Nvidia’s shares continued to slide on Friday, following its blockbuster earnings, highlighting doubts over the AI ​​industry’s omnipresent outlook — and concerns over whether its growth can be sustained over the long term.
What complicates the situation is that inflation shows no signs of slowing down. Producer Price Index, which measures the average change in selling prices for domestic producers, Greater than expected growth in JanuaryAccording to recently released data, President Donald Trump’s claim of increasing inflation has been weakened. pet.
“Inflation is not resolved yet,” said Stephen Kolano, chief investment officer at Integrated Partners. cnbc. “This creates uncertainty about which path policy will take for the remainder of the year.”
It remains to be seen whether we are truly on the brink of a collapsing AI bubble. For now, tech companies are treating the current moment as business as usual. Earlier this week, Meta $60 billion deal agreed upon With AI chip maker AMD, fear is spreading among investors.
But with OpenAI recently cutting its massive $1.4 trillion spending plan by more than half, cracks are beginning to appear as the AI ​​race continues.
More on AI Bubble: Investors are worried that the AI ​​bubble is finally bursting
