+34
U.S. stocks tied to artificial intelligence experienced sharp volatility after technology leaders called for slower development of advanced models, triggering concerns about reduced infrastructure spending. Market sentiment reversed when Meta's popular Muse assistant renewed optimism, driving major gains in AI-related and semiconductor shares.
Florida's Private Railroad Brightline Files for Bankruptcy Those are the two extremes the stock market has swung between over the past two weeks, sending hundreds of billions of dollars sloshing out of — and then back into — AI-exposed stocks while fraying the nerves of investors scrambling to keep up.
"This has been a narrative market and the narrative changes every other week," said Nancy Tengler, chief executive officer at Laffer Tengler Investments. It started on Sept. 12, when Anthropic Chief Executive Officer Dario Amodei called for a slowdown in development of cutting-edge AI models, which was quickly backed by OpenAI Chief Executive Officer Sam Altman and SpaceX Chief Executive Officer Elon Musk.
The moves seemed to validate a series of recent warnings from within the industry about existential risks posed by the technology. The response in the stock market was swift. On the first trading day after Amodei's essay was published, AI infrastructure stocks tumbled, as investors worried that hitting the brakes on development would mean less spending on computing equipment.
The tech-heavy Nasdaq 100 Index dropped 1.5% between Sept. 14 and 15, erasing more than $600 billion in market value as stocks like CoreWeave Inc. and Lam Research Corp. fell more than 9%. But those fears vanished last week as excitement about the popularity of Meta Platforms Inc.'s Muse personal assistant sent traders rushing back into AI exposed stocks.
Meta shares jumped 11% on Monday, putting the Facebook and Instagram parent on pace for its best month in more than a decade after struggling for much of the year amid concerns that heavy spending on AI wouldn't pay off. Arm Holdings Plc jumped 17% on Monday while Intel Corp. and Advanced Micro Devices Inc. each rallied more than 9%.
The Philadelphia Stock Exchange Semiconductor Index, known by its ticker SOX, gained 6% on Monday and Tuesday, helping to push the Nasdaq 100 to its first record since early June. It also triggered selloffs in the shares of companies that rely on recurring bills and negotiable pricing as AI agents are expected to improve at tasks like price comparison, trip bookings and customer service interactions.
Insurer Allstate Corp. fell 8.9% this week while cable-provider Charter Communications Inc. sank 12% and Planet Fitness Inc. shed 14%. Still, by the end of the week, $3 trillion had been added to the Nasdaq 100 since the Sept. 15 low.
"The moves are staggering in both directions," said Rhys Williams, chief strategist at Wayve Capital Management. "It's hard to explain from a fundamental point of view. "Of course, rapid changes in sentiment are nothing new in this market, which has been propelled higher by AI for nearly four years. In early 2025, fears about a pullback in spending sparked by a DeepSeek AI model, developed on the cheap in China, caused semiconductor stocks to plunge.
Nvidia Corp., which dominates the market for AI chips, dropped 17% in a single day. While those fears proved to be misplaced, AI has only gotten more important for the market and the economy with spending from tech giants and AI startups ballooning. And that's giving investors itchy trigger fingers, especially when it comes to AI disruption.
The Muse-driven selloff had echoes of earlier this year when releases of AI tools from Anthropic sent shares in a broad range of industries tumbling, from software-as-a-service companies to asset managers. But when it comes to AI spending, investors are grappling with other risks in addition to safety. Interest rates are soaring, making the cost of AI development more expensive. And there's a rising backlash against data centers.
Fears about that flow of money slowing down have been most apparent in semiconductor stocks. After doubling from the start of the year through June 22, the SOX tumbled 29% to a July 29 low. While the index has staged a rebound, it remains down 13% from the June peak.
The selloff has knocked a lot of the froth out of stock prices, leaving many of the companies poised for more gains, according to JoAnne Feeney, a portfolio manager at Advisors Capital Management.
"You don't have to believe that this pace of growth is going to continue for five years in order to own companies like Nvidia or Broadcom and some of the others, because their valuations have really come in," said Feeney, whose firm holds shares of both companies. "We may very well be positioned for renewed interest in the key contributors to the AI infrastructure build out. " Nvidia shares recently hit their cheapest valuation in more than a decade.
At less than 17 times profit expected over the next 12 months, the stock's multiple is half what it commanded in 2025, according to data compiled by Bloomberg. Other investors are taking a more cautious approach. Daniel Pilling, a portfolio manager at Sands Capital Management, still sees plenty of risk in the AI trade, particularly because no one knows what's in store for the technology.
"We manage it with a lot of humility in terms of what we can do and what we know," said Pilling. "But net-net I would actually still say that maybe there's a sense of AI concern, I suppose rather than sort of that bullishness that we had in May and June. ""What you don't want is euphoria, which is what we had at the end of the nineties," she said, referring to the dot-com bubble.
Investors will get the latest read on the outlook for AI spending this week when memory chip maker Micron Technology Inc. reports earnings on Wednesday after markets close.
"It's easy to focus on the destruction argument, and it's equally easy to focus on the potential creation argument," said Bill Mann, chief investment strategist and portfolio manager at Motley Fool Asset Management, which has about $2.7 billion in assets. "That's going to be our reality in the markets for a while. "
Artificial Intelligence Stock Market Semiconductors Investors Nasdaq 100
Canada Latest News, Canada Headlines
Similar News: You can also read news stories similar to this one that we have collected from other news sources.
This Meta stock stat doesn't make sense after the Muse mic dropThis valuation metric seems outdated for Meta.
Read more »
Meta Nears $2 Trillion Market Cap as Muse AI Agent Drives Stock SurgeMeta Platforms shares jumped nearly 13% this week, approaching a $2 trillion market capitalization, driven by its new Muse AI agent and device launches.
Read more »
Market Briefing: US-Canada Potash Tensions, Alberta Fuel Tax Cut, and Global Rate MovesThis news update covers the geopolitical tension between the US and Canada over potash sourcing, Alberta's temporary fuel tax suspension, and the Bank of Canada's potential interest rate strategy. It also discusses trade negotiations following the departure of Prime Minister Mark Carney, key beneficiaries of the Canada Investment Summit, and technological advancements in pipeline inspections.
Read more »
As tariffs hit art, Indigenous artists face frustrating roadblocks and a sputtering art marketTrade war with U.S. disrupts not just income stream, but hurts cross-border ties central to First Nations, Metis and Inuit creators
Read more »