AI stocks stumbled after Oracle and Broadcom’s disappointing updates reignited bubble fears. Yet investors argue the long-term AI story remains intact.

  • Oracle fell 17% over two days after warning of an extra $15 billion in AI-related capital spending and project delays to 2028.
  • Broadcom plunged 11% as margins weakened due to rising sales of lower-profit custom AI chips.
  • The selloff dragged down the Nasdaq (-1.4%) and S&P 500 (-0.9%), capping a volatile week for AI-driven names.

AI Euphoria Faces a Reality Check

The back-to-back disappointments from Oracle and Broadcom have reignited questions about whether the AI boom has gone too far.
Michael Burry, famed for his 2008 “Big Short”, compared current valuations to the dot-com bubble, warning that markets could be nearing a “blow-off top.”

Yet most investors remain cautious about calling an end to the AI rally. Chuck Carlson of Horizon Investment Services said, “I don’t think this is the beginning of a sustained, significant decline. The AI trade is intact.”

The Spending Debate

Oracle’s ballooning AI budget, coupled with Broadcom’s margin pressure, has triggered renewed scrutiny of AI spending.
Nationwide’s Mark Hackett noted, “You’ve seen this really positive correlation between aggressive capital spending and stock prices. That has changed beneath the surface.”

Even Meta warned last month of “notably larger” AI expenses in 2026, signalling that corporate America’s AI investments are only growing, but investors are now demanding results.

Skepticism Rising, But No Panic Yet

Ortex data shows that while short interest is rising in smaller AI names, the largest players like Nvidia and Palantir remain lightly shorted.
“We don’t yet see positioning that looks like investors are betting on an AI bubble bursting,” said Peter Hillerberg of Ortex Technologies.

Analysts describe current pullbacks as “targeted scepticism” rather than a broad rejection of AI. In other words, the trade is maturing, not dying.

The AI rally may be cooling, but its foundation still looks solid. With companies racing to build data centers and roll out AI infrastructure, short-term turbulence could set the stage for healthier, more selective growth.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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