Concerns about a growing AI bubble resurfaced last Thursday as US markets gave up a brief rally sparked by strong Nvidia earnings. Although Nvidia reported continued strong demand for its data-center chips, the gains quickly faded and tech stocks came under pressure. The S&P 500 fell 1.6%, the Dow slipped 0.8%, and the Nasdaq dropped 2.2%.
Nvidia, now valued at around $4.4 trillion, has been driving extreme valuations across the AI sector for months. Analysts warn that hyperscalers may be overspending on AI infrastructure. A mixed US jobs report also reinforced expectations that the Federal Reserve will keep interest rates unchanged for now.