U.S. tech stocks face their "worst week since April," with the "AI Eight Giants" losing $800 billion in market value in a single week.

Amid a series of shocks triggered by concerns over high valuations, macroeconomic headwinds, and signs of intensifying competition, U.S. tech companies closely tied to the AI boom have suffered their worst week since April this year, with investor sentiment cooling significantly.

This week, the tech-heavy Nasdaq Composite Index fell a cumulative 3%, marking its worst weekly performance since April. Notably, the combined market value of the eight companies most closely associated with AI evaporated by about $800 billion, and the total market value of U.S. companies related to AI has lost nearly $1 trillion since last Friday.

This wave of sell-offs is driven by widespread concerns over the excessively high valuations of Silicon Valley tech giants, intertwining with signs of a weakening U.S. labor market and declining consumer confidence that emerged this week. The University of Michigan Consumer Sentiment Index fell in November to its lowest level in three years, further intensifying market anxiety.

Meanwhile, investor behavior also reflects caution. According to analysts at JPMorgan, retail traders—usually known for buying the dip—chose to stay on the sidelines this week. In a report to clients, the bank noted that retail investors cut their positions after Palantir released its earnings report and took profits in quantum computing stocks, which have also surged this year.

Valuation Concerns and Macro Headwinds

Nvidia, the world’s most valuable company, bore the brunt of this week’s decline, with its market capitalization shrinking by about $350 billion. Just over a week ago, the company became the first to reach a $5 trillion valuation. Microsoft, Oracle, and Broadcom also saw their stock prices fall this week.

Concerns over massive capital expenditures in the AI sector are increasingly becoming a market focus. Florian Ielpo, head of macro at Lombard Odier Investment Managers, commented:

“The capital expenditures related to AI are immense, and increasingly financed through debt—it’s reminiscent of the frenzy for questionable investments during the 2000 tech bubble.”

Data shows that the combined Q3 capital expenditures of the four tech giants—Alphabet (Google’s parent), Amazon, Meta, and Google—reached a whopping $112 billion last week. Meanwhile, the entire industry is borrowing hundreds of billions to support its expansion in AI.

Macroeconomic uncertainty adds another layer of shadow to the market. Due to a federal government shutdown causing gaps in key economic data, investors have grown increasingly worried that the job market may have weakened significantly since late September. Mike Zigmont from Visdom Investment Group stated:

“The risk of recession may be quietly mounting right under our noses.”

The Chicago Fed’s estimated hiring rate declined for the sixth consecutive month in October, while a series of layoff announcements from Amazon, Paramount, and Target have also unsettled investors.

Stephen Yiu, Chief Investment Officer of the Blue Whale Growth Fund, believes, “Hiring has remained very weak, and the Federal Reserve is behind the curve—it needs to cut rates faster.” The fund is heavily invested in Nvidia, but Yiu also added:

“We hold none of the other ‘Tech Seven’ members, and I’m very concerned about them burning cash to stay competitive.”

OpenAI’s Financial Situation Raises Market Speculation

The financial situation of OpenAI, a leading player in the AI sector, has also sparked new market speculation. This week, remarks from OpenAI’s CFO Sarah Friar drew attention, as she said that the $500 billion–valued startup may seek “support” from the U.S. government.

This statement was particularly striking because OpenAI has already secured a $1.4 trillion commitment to AI infrastructure through a complex web of deals with chipmakers Nvidia, AMD, Broadcom, as well as cloud providers Microsoft, Amazon, and Google. These close ties mean that the expected growth of major tech companies in the coming years is now intertwined with OpenAI’s fate.

To ease market anxiety, OpenAI CEO Sam Altman posted on social media Thursday to clarify that the startup does not want government guarantees, and predicted that its revenue would “grow to hundreds of billions of dollars” by 2030.

Risk Warning and DisclaimerThe market involves risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment decisions based on this are at the user’s own risk.