The AI hype is starting to fade on Wall Street. Here’s what investors need to know.

Core Insights - Super Micro's shares have experienced significant volatility over the past two years, failing to reach their record peak from early 2024, while CoreWeave's stock has declined from its June peak following a surge in demand post-IPO [1] - The AI spending boom is drawing parallels to the telecom bubble of the late 1990s, raising concerns about potential bankruptcies and financial instability [3][7] - Major AI-related companies, including Nvidia, are facing scrutiny over their financial practices, particularly regarding circular financing and the sustainability of their spending [6][10] Company Performance - The Nasdaq Composite index was on track for a fourth consecutive day of declines, marking its longest losing streak since April, although it managed to finish the session positively [4] - Despite creeping doubts affecting major indexes, investor eagerness to buy on dips has limited losses in the market [5] - Nvidia's stock has remained stagnant for nearly two months, closing at $178.19, reflecting a lack of momentum in the AI trade [18] Market Dynamics - A report indicated that 41 stocks associated with AI have driven 75% of the S&P 500's advance since the launch of ChatGPT in November 2022, contributing to 80% of corporate earnings growth and 90% of capital spending growth [9] - Oracle's recent jumbo bond deal has shifted the financing landscape for AI spending, indicating a potential arms race among companies to borrow for data-center build-outs [10] - Analysts are increasingly questioning the sustainability of the AI boom, with concerns about power constraints and the risk of excess data-center capacity [13][14] Investor Sentiment - Some analysts are optimistic about AI but are also exploring risks, noting that service-provider revenues continue to grow and mentions of AI in earnings calls have increased [12] - The AI trade is showing signs of stalling, with technical indicators suggesting it may be overbought, as evidenced by the Global X Artificial Intelligence & Technology ETF reaching a high relative-strength index [19] - Concerns about the AI spending bubble have been echoed by notable figures in the hedge-fund world, with warnings about unchecked data-center spending potentially leading to significant capital losses [17][20]