From AI boom to valuation worries: Why investors are rethinking big tech bets

Nvidia shares tumbled nearly 5% on Monday, dragging semiconductor stocks lower as investors grew cautious about the sustainability of the AI investment boom. The decline pushed Nvidia below Apple in market capitalisation, ending its run as the world’s most valuable publicly traded company. (Sources: Yahoo Finance, CNBC)

Apple reclaimed the top spot among global companies after its shares gained while Nvidia fell sharply. Apple’s market value moved ahead of Nvidia as investors rotated towards companies perceived as having steadier earnings profiles amid concerns around AI spending.

Investor concerns resurfaced over the possibility of "circular financing" in the AI ecosystem, with reports suggesting Nvidia could support large-scale AI infrastructure investments involving major AI firms. Markets worried that heavy spending commitments could create questions around returns on AI investments.

The selloff was not limited to Nvidia. Semiconductor companies across the supply chain came under pressure as investors reassessed AI-related valuations and demand expectations. Memory chipmakers and equipment suppliers also witnessed declines.

Investor sentiment was further impacted by developments in China’s semiconductor industry. The strong debut of Chinese memory-chip maker CXMT raised concerns about rising competition and potential pressure on global chipmakers.

The AI rally has been fuelled by massive investments in data centres, advanced chips and computing infrastructure. However, investors are increasingly questioning whether the expected returns will justify the scale of spending by technology companies.

Nvidia remains a key beneficiary of the AI boom, supplying advanced processors used in data centres and artificial intelligence applications. However, after a steep rise in valuation, the stock has become more sensitive to concerns about competition, spending cycles and future growth expectations.

Apple’s resurgence highlights a broader shift in investor preference. While AI-linked stocks face volatility, companies with strong consumer ecosystems, stable cash flows and consistent earnings growth are attracting renewed interest.

Markets will focus on upcoming technology earnings, AI infrastructure spending plans and management commentary on future investments. The key question remains whether AI spending will translate into sustainable profits or whether valuations have moved ahead of fundamentals.

The Nvidia-led chip selloff signals growing caution around the AI trade. While demand for artificial intelligence remains strong, investors are becoming more selective and closely monitoring spending efficiency, competition and profitability across the technology sector.