AI trading downturn sweeps tech stocks: ON Semiconductor plunges 24%, Oracle posts biggest weekly drop since 2001, all Magnificent Seven stocks decline for the week.

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AI trading has experienced the most intense cooling this year.

As investors begin to reassess whether the massive capital expenditures on AI infrastructure can generate sufficient returns, the US tech sector has faced a broad sell-off this week. Oracle marked its largest weekly drop since the lows following the bursting of the dot-com bubble in 2001. Onsemi's $7 billion acquisition of Synaptics to enter the field of physical AI sparked concerns in the market, causing its share price to plunge by nearly 24%, the largest single-day drop since 2020.

On Friday, as oil prices retreated, US market sectors like energy, healthcare, and consumer were relatively resilient, while AI-related stocks continued to be the biggest drag on the market. The Philadelphia Semiconductor Index plunged over 5% in one day, falling nearly 8% for the week, making it one of the worst weekly performances this year. The Nasdaq index remained under pressure. Non-AI-related S&P 500 components collectively rose more than 2% this week.

Although five giants including Microsoft rebounded on Friday, the "Magnificent 7" tech giants—including Nvidia—all declined for the week. SpaceX dropped more than 17% in its second week of trading, wiping out all gains from its first week after listing. AI trading is undergoing a broad and intense valuation repricing.

The Goldman Sachs index tracking TMT blue-chip tech stocks recorded its largest weekly drop since April last year, when the Trump administration announced global reciprocal tariffs.

Oracle marks its largest weekly drop since the dot-com bubble lows

In this round of selling, Oracle, which had previously surged on the AI data center story, became a major casualty.

Oracle fell nearly 2.6% on Friday and sank 19.4% for the week, the largest weekly drop since August 2001.

Previously, Oracle saw its market value climb rapidly thanks to increasingly ambitious data center development plans and massive AI cloud orders. However, the market has recently begun to focus more on a core issue: when will soaring capital expenditures translate into profits and free cash flow?

Investors worry that amid the escalating AI infrastructure race, building ultra-large-scale data centers will require sustained massive investment, but future customer demand, GPU supply, and the pace of profitability remain highly uncertain. This has triggered profit-taking in software and cloud computing companies whose valuations expanded rapidly.

Onsemi announces $7 billion acquisition of Synaptics, shares see biggest daily drop in nearly six years

The chip sector was also hit hard.

Onsemi announced it would acquire Synaptics for about $7 billion, hoping to strengthen its presence in the fields of human-machine interaction, edge AI, and smart devices.

Onsemi stated the acquisition is aimed at entering the “physical artificial intelligence” sector. This transformation would increase its potential market size by $30 billion, with the total space expected to reach $243 billion by 2030.

Onsemi CEO Hassane El-Khoury defended the core business, saying the acquisition "perfectly complements all the achievements we've made on a solid foundation," and opens up new markets for the company, including AI-centric computing platforms.

However, the capital market reacted aggressively. Onsemi shares plunged almost 24% Friday, marking the largest single-day drop since October 2020, and becoming one of the worst-performing stocks in the S&P 500.

Main investor concerns include:

The $7 billion deal means the company will bear higher financial pressure;
The market is worried about high integration risks, which may drag down profitability in the short term;
The overall semiconductor sector has seen a valuation correction, causing investors to reduce risk exposure.

Against the backdrop of a broader AI industry valuation pullback, even large acquisitions with long-term strategic significance struggle for market recognition.

AI trading cools across the board; "Tech Magnificent 7" all close lower

Super blue-chip tech stocks were not spared. As of Friday's close:

Alphabet fell about 2.2%, down for five consecutive trading days, hitting a low since April 21; weekly decline: 8.92%;
Nvidia dropped 1.64%, also down five days in a row to the lowest since April 13; weekly decline: 8.62%;
Apple, after four consecutive days of declines, rose 3.14%, but still dropped 4.77% for the week;
Microsoft, after two consecutive declines, rose 5.7%, ending its adjustment, but still lost 1.69% for the week;
Amazon, which dropped more than 3% Thursday, rose 2.5%, but was down 4.79% for the week;
Meta, after four consecutive declines, rose nearly 1.4%, but fell 4.67% for the week;
Tesla, after three consecutive declines, rose 1.22%, but was down 5.19% for the week.

This means the so-called "Tech Magnificent 7" all posted weekly losses, ending their months-long leadership in the US stock market.

Market participants point out that AI trading has clearly cooled recently, as investors refocus on valuation, profitability, and cash flow, not just distant AI growth stories.

SpaceX drops over 17% in its second week of trading, wiping out first-week gains

The highly-watched new listing SpaceX was also not immune.

SpaceX edged up just 0.15% by Friday's close, marking a weekly decline of 17.17% in its second full week as a listed company, essentially erasing its 14.94% cumulative gains in the first week after listing.

Initial fever quickly cooled, seen as a microcosm of waning risk appetite for growth stocks. As the valuation of AI stocks adjusts, newly listed tech companies face greater profit-taking pressure.

AI capital expenditures face the “profit test”

Analysts believe the core logic of this round of tech stock adjustments is not vanishing AI demand, but a shift from "purely looking at growth" to "focusing on returns."

Over the past year, tech giants like Microsoft, Alphabet, Meta, Amazon, Oracle have been ramping up capital investments to build AI data centers, buy GPUs, and expand cloud infrastructure. Yet, as spending continually sets new records, more investors are asking when these inputs will truly lead to profit growth.

Meanwhile, across many AI industry chain sectors—from storage chips, GPUs, servers, to software—valuations surged. When risk appetite drops, concentrated profit-taking can trigger a sector-wide adjustment.

Many institutions believe the market is not denying AI's long-term growth, but undergoing a round of valuation repricing—future share price performance will depend more on whether companies can prove their huge AI investments can sustainably translate into revenue growth, profit improvement, and cash flow, rather than just letting the capital expenditure story support valuation.

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