Has the AI bubble finally popped?

THE artificial intelligence (AI) bubble has deflated, and now the bigger question is whether it has popped irrevocably, bringing the short-lived AI bull market to an end.

The Nasdaq Composite closed last Friday (Aug 2) at more than 10 per cent below its July peak, which placed it in official correction territory. On Monday this week, Japan’s Nikkei entered bear-market territory as it closed down 12.4 per cent in its largest single-day percentage drop since 1987, although the index rebounded sharply the next day.

In the United States, the biggest losers so far are the Magnificent Seven mega-cap tech stocks that had captured the lion’s share of the bull-market gains. The tech stocks hit a wall during earnings season as investors grew tired of the hype about AI’s potential and demanded to see its financial impact.