Nvidia and Magnificent Seven stocks tumble as AI bubble concerns grow

The Nasdaq is on track for its biggest weekly drop since US President Donald Trump's tariffs onslaught. Photo / Getty Images

Nearly US$1 trillion ($1.8t) has been wiped off the value of Wall Street’s most valuable tech companies this week over concerns about the rocketing valuations linked to artificial intelligence (AI).

The so-called Magnificent Seven group of companies, which have led gains on US stock markets, have been hit hard by concerns that excitement around AI was not backed up by fundamentals.

Nvidia, which became the world’s first US$5t company last month, dropped another 2.3% in early trading in New York. Nearly US$500b was wiped off its market capitalisation this week.

Tesla, Google-owner Alphabet, Amazon Meta, Microsoft and Apple were also nursing heavy losses, with the blow to the Magnificent Seven totalling as much as US$953.7b.

The Nasdaq, the world’s biggest tech index, was on track for its largest weekly drop since US President Donald Trump’s tariff onslaught in April.

It has gained more than 50% since Trump announced his so-called “liberation day” import taxes but has dropped 3.9% so far this week.

Some traders have raised questions over whether spending earmarked by AI companies can be matched by profits or revenues.

Part of Nvidia’s recent appeal has been its US$100b deal with OpenAI, the creator of ChatGPT, which has said it plans to invest US$1.4t over the next eight years. This is far more than it has raised to date.

Sam Stovall, chief investment strategist at CFRA Research, said: “There is a continuation of the concern of a possible pullback... it’s traditional early November weakness triggered by elevated valuations and the running out of catalysts to either support or propel the market.”

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