Is Wall Street losing faith in AI? (techcrunch.com)

Wall Street’s tech-heavy selloff this week — the Nasdaq Composite fell about 3%, its worst week since April — has raised questions about investor appetite for AI-driven growth. Stocks tied to AI narratives took the brunt of the pain: Palantir slid ~11%, Oracle ~9% and Nvidia ~7%, while Meta and Microsoft each dropped roughly 4% even after earnings that reaffirmed heavy AI investment. Market watchers told the Wall Street Journal that “valuations are stretched,” meaning high expectations make tech names particularly sensitive to any negative signal. For the AI/ML community the episode is a reminder that speculative valuations can compress quickly; sustained heavy spending on models and infrastructure may not placate investors unless clear ROI timelines emerge. Broader economic headwinds — a government shutdown, falling consumer sentiment and mass layoffs — likely amplified the move, while the less tech-heavy S&P 500 and Dow fell only 1.6% and 1.2%. Practically, this could translate into more scrutiny of near-term revenue from AI projects, tighter funding conditions for startups, and a shift toward pragmatic productization and cost-efficiency over headline-grabbing AI bets.