The last straw: why did the quotes of AI giants collapse
The American stock market has gone through some unpleasant days. The corporate reporting season disappointed investors, and the artificial intelligence (AI) sector, which currently dominates exchanges (without its growth, the performance would have been quite gloomy), collapsed. The main disappointment was Alphabet (Google's parent company). The publication of quarterly results cost him about $500 billion in market capitalization. Everyone sees that capital expenditures on AI infrastructure are growing exponentially, while revenues from the introduction of neural networks remain modest. Whether the collapse of AI companies' quotations will continue, and what this means for the entire stock market and the economy, is in the Izvestia article.
Google, then everywhere
The decline in Alphabet's stock prices has triggered a chain reaction across the technology sector. The Nasdaq 100 index showed a sharp decline at the end of Friday's trading, futures indicate a continuation of asset dumping. Amazon Corporation has presented a weak forecast for the next quarter: the AWS cloud division is burning free cash flow in order to purchase new servers and cooling systems, which led to a 7.5% drop in the company's quotes. Intel's report turned out to be an outright failure — shares collapsed by 14% amid a loss of market share and multibillion-dollar losses in the manufacturing segment.
As expected, the pressure has spread to Nvidia, the main beneficiary of the AI race. The papers of the leading accelerator developer sank by 6.8%. The basic rule of an investor is that if buyers of "shovels" cannot find gold, they will stop buying new inventory very soon.
The recession looks reasonable, its inevitability has been predicted for a long time. There is a serious discrepancy between capital expenditure and return on investment. In 2026, US high-tech corporations spent over $200 billion on the purchase of equipment and the construction of data centers. The financial models of investment banks assumed that these investments would begin to generate comparable revenue through corporate subscriptions and new services. In practice, large businesses refuse to massively integrate AI into their processes due to problems with the security of confidential data and hallucinations of algorithms. The gap between the billions spent and the millions earned has become obvious, and predictions about the emergence of superintelligence do not help here.
The current collapse is a continuation of the trend that started a few months ago. Since June, when large funds started taking profits, the market has been nervous. The situation was exacerbated by the expansion of cheap Chinese open source models, which lowered global prices for token generation.
An additional unpleasant surprise was the decision of the US administration to ban the export of advanced American neural networks (such as Mythos from Anthropic) to foreign users. The American bigtech was trapped in the domestic market, having lost the opportunity to monetize its developments on a global scale. The energy crisis has been added to this. The blocking of the Strait of Hormuz and high energy prices have increased the operating costs of powering and cooling the growing data centers.
"Kramer Indicator"
The opening of trading on Monday is felt with nervousness. Asian platforms, which will be the first to react to Friday's negative in the United States, will almost certainly open in the red zone, launching a wave of margin calls. The market situation was diluted only by CNBC TV presenter Jim Kramer, who called on retail investors to aggressively "buy out the drawdown" in technology stocks. Investors know that the rule "listen to Kramer — do the opposite" rarely deceives. Therefore, his optimism was perceived by professionals as a sure sign that things are really bad and the bottom of the sales has not yet passed.
The collapse in the quotations of public companies raises questions about the plans of a number of AI startups to enter the stock exchange. The company Anthropic, as well as other major players like Databricks or CoreWeave, expected to hold initial public offerings in late 2026 or early 2027. These plans were based on sky—high multipliers (the P/S indicator is the ratio of capitalization to revenue), which reached 50-70 annual sales.
Now such ratios may not be in order. Venture capital funds, which poured tens of billions of dollars into these startups at the peak of the hype, cannot withdraw capital through the stock exchange without fixing huge losses. Institutional investors are not sure that they want to continue paying for unprofitable (or insufficiently profitable) business models. The window for AI placements may close very soon, as a result of which private companies will be left alone with the need to reduce staff and cut development budgets.
Ricochet across all
If the AI bubble bursts, it poses a direct threat to the entire American economy. A narrow group of technology corporations (the Magnificent Seven) account for about a third of the weight of the S&P 500 index, and their correction automatically pulls down the entire broad market. The reverse "wealth effect" is being triggered: American households and pension funds, seeing a sharp reduction in their portfolios, switch to savings mode and reduce consumer spending.
For the United States, teetering on the brink of stagflation due to expensive oil and the tight monetary policy of the Federal Reserve under the leadership of Kevin Warsh, the loss of the last growth driver in the face of the AI industry means a high probability of a sharp slowdown in the economy (if not a recession). Corporations will start optimizing costs and canceling orders for server equipment, concrete, cables, and cooling systems.
The compression of American investment and consumer demand will ricochet the export-oriented economies of Asia. Memory chip manufacturers in South Korea and contract assemblers in Taiwan will face a sharp drop in orders. Artificial intelligence can repeat the fate of the dot—coms — in the long run, it has a huge impact on the economy, but right now it is the cause of the collapse.
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