Shares in artificial intelligence (AI) stocks in the US and Asia have taken a hit as of July 25.
Nvidia has seen its value drop by around 15 percent in the last two weeks.
On July 24 alone, Nvidia's stock value dropped by 6.8 percent. This is in particular contrast with Nvidia's extremely strong performance this year, with the company hitting a market cap of $3 trillion just last month. This valuation followed $2 trillion in February 2024, and $1 trillion in May 2023.
Rival chip designer AMD is down 6.89 percent for the past five days and Arm 6.79 percent.
Google parent company Alphabet has similarly seen its stock prices dip by three percent in that same time, despite posting strong quarterly financial results earlier this week.
During those results, Google noted that capex could be expected to continue in the realm of $12bn per quarter largely due to investments in servers and data centers.
Microsoft is down 3.45 percent over the past five days at the time of writing, and Apple by 5.13 percent. Amazon and Oracle seem unaffected.
In Asia, chip makers Renesas Electronics and Tokyo Electron in Japan and South Korea's SK Hynix were also impacted.
The selling off of technology shares has hit exchanges overall, with New York's S&P 500 losing 2.3 percent and Nasdaq 3.6 percent - their biggest one-day fall since 2022.
In addition, the Dow Jones Industrial Average dropped by 1.2 percent.
"Investors are now becoming more concerned about all this expenditure with AI without the revenue benefit," Jun Bei Liu, portfolio manager at Tribeca Investment Partners, told the BBC. "I don’t think this will mark the start of the disbelief in AI... it just simply means investors will focus more on returns in this space than just buying the whole sector."
Earlier this month, a research newsletter from Goldman Sachs warned that, despite large tech companies investing massive amounts in fueling generative AI, they have yet to demonstrate sustainable business models.
The investment banking firm estimates that around $1 trillion will be spent on AI infrastructure in the next year, but says that even if a 'killer application' emerges, it is unclear if it will generate the financial returns.
Head of global equity research Jim Covello said: "My guess is that if important use cases don’t start to become more apparent in the next 12-18 months, investor enthusiasm may begin to fade."
