The Danger Signals of US Tech Stocks: Some AI leaders, including NVIDIA, have already adjusted by 10%.

In recent days, some of the hottest AI stocks this year have entered a correction range. According to Insider website statistics, * * calculated by the closing price on August 9, the 10 most popular AI stocks earlier this year fell from 2.3 to 29%, of which 5 fell more than 10%. **Even the tech giant's latest quarterly results failed to impress the market. Insider website analysis said that the recent decline in AI hot stocks may be short-term fluctuations, or it may be a reaction to rising long-term interest rates. Or, it could be a sign that investors are tired of the AI hype and are worried that the technology may take years to generate real profits, if any. Morgan Stanley analysts described Amara's Law (Amara's Law) in an insightful research report in early June, which states that we tend to overestimate the short-term impact of a technology and underestimate its long-term impact. They point out that technology stocks had the largest inflow in history-$9 billion-in the first week of June, at least 40% higher than the second-highest weekly inflow. The researchers wrote: " If generative AI is to avoid becoming the hype cycle of Amara's law, these tools will need to demonstrate stickiness **in the medium term, which will become increasingly challenging over time." This spring, executives only had to mention the word "AI" on the earnings call and traders would press the buy button, and some suspect that automated trading systems have also been set up to buy based on such signals. On the first quarter analyst conference call, big tech companies mentioned "AI" 168 times ". At the time, AI stocks were in full swing. In May, the Insider website listed the 10 biggest gainers in 2023, including C3.ai, Nvidia and AMD. **However, in the second quarter earnings season, the mention of" AI "did not seem to have the same impact again. **Executives have used the term 390 times this fiscal quarter, according to a July 28 Bloomberg report, but the tech-dominated Nasdaq has fallen more than 3% since then. According to Insider website analysis, when everyone finally buys and there are no new buyers, such trading trends tend to gradually disappear. Similarly, using automation and AI to buy AI shares may be a self-fulfilling prophecy that won't last. There are other small signs that the surge in AI stocks may not be in line with extremely high expectations. For example, Jasper AI is a startup that previously raised $0.125 billion at a $1.5 billion valuation, but in July the company made layoffs. In addition, the use of ChatGPT has declined, although this may be temporary. It is worth mentioning that Nvidia, the "AI leader", is scheduled to announce its quarterly results on August 23. That could set the tone for AI stocks for the rest of 2023. As of August 11, Nvidia's shares had fallen about 14% from their peak. This week, the tech-dominated Nasdaq 100 index fell 1.62 percent, while last week the index fell about 3 percent, the first two-week decline since December. **The big question now is whether it will drag the overall market lower if the rally in large technology stocks breaks down further, or whether there will be other stocks to help turn the tide. **After a special re-adjustment last month, these giant technology stocks together account for 40% of the total market capitalization of the Nasdaq 100 Index constituents. James St. Aubin, chief investment officer at fund management firm Sierra Investment Management, said **it seems that traders have been willing to turn to other areas of the market that are not as highly valued as large technology stocks. **Wall Street Slightly Earlier Mentioned, tech stocks had a poor start to the quarter, while energy stocks climbed sharply in August, regaining market leadership for the first time since late 2022. St. Aubin said in a telephone interview with MarketWatch that the front-runners are showing signs of fatigue, but the laggards are catching up. He said it would be more worrying if there were a full outflow of funds and a shift to cash and bonds. * * [Morgan Stanley warned in a recent report](https://wallstreetcn.com/articles/3695008?keyword=%E6%91%A9%E6%A0%B9%E5%A3% AB %E4%B8%B9%E5%88%A9%E8%AD%A6%E5%91%8A%EF%BC%9A%E7%9C%8B%E7%9C%8B%E8%8B%B1%E4%BC%9F%E8%BE%BE%EF%BC%8C%E7%BE%8E%E8%82%A1AI%E5%A4%A7%E7%89%9B%E5%B8%82%E5%8F%AF%E8%83%BD%E6%8E%A5%E8%BF%91%E9%A1%B6%E5%B3%B0) that the bubble of AI concept stocks is nearing its peak, with Avida, an AI benchmark, up more than 200 per cent since the beginning of this year. Based on historical records, **Morgan Stanley strategists expect the stock market rally to come to an end. **Because past records show that in the three years before the peak, the bubble in U.S. stocks usually has a median increase of 154 percent.