Artificial intelligence stocks, an indicator of the recent bull market run, have lost steam over the past month.
Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOGL,GOOG), and Amazon (AMZN) are all down greater than 15% over the period amid a broader market sell-off that’s seen the Nasdaq Composite (^IXIC) decline greater than 10% and the S&P 500 (^GSPC) slid greater than 8%. Concurrently investors have begun to question recent earnings results from the group, some strategists don’t think that’s the top of the AI run.
“We keep our chubby to U.S. equities, driven by the AI mega force, and see the selloff presenting buying opportunities,” BlackRock Investment Institute wrote in a research note Monday night.
Recession fears have driven the market lower as investors speculate over whether the Federal Reserve is keeping monetary policy too restrictive. BlackRock describes these concerns as “overdone.”
“We expect growth shall be supportive of risk assets and consider markets are pricing in too many Fed rate cuts,” the team wrote.
Evercore ISI’s Julian Emanuel, who holds probably probably the most bullish year-end S&P 500 goal on Wall Street at 6,000, will not be backing down either. In a note to clients on Monday, Emanuel noted that the recent spike inside the CBOE Volatility Index(^VIX), provides the prospect for “patient buying.” Quick spikes in volatility, as seen on Monday, normally end with stocks higher a 12 months later, per Emanuel.
He likens the current moment to the large drawdowns seen in tech stocks through the “1994-99 Boom bull market.”
“The rationale for AI, in a world where the worldwide workforce is aging rapidly and efficiency shall be critical to drive productivity enhancements, is larger than ever,” Emanuel wrote. “We view the current ‘AI Air Pocket’ as a probability to comprehend exposure to a protracted term secular theme.”
Still, if investors have been staying out of the large tech names because valuations have risen to an uncomfortable level, whether the recent drawdown has done enough to create a stunning buying opportunity is up for debate.
The equity research team at Goldman Sachs points out that while the basket of enormous tech stocks, including — Apple (AAPL), Amazon, Alphabet, Meta (META), Microsoft and Nvidia — is down 13% since July 10, earnings estimates have been moving higher. Since June 30, 2025 earnings estimates for all of those corporations except Microsoft have risen.
This has brought a contraction of valuation multiples for the group of tech stocks, but they still trade barely higher than the 10-year median average.
“The mega-cap tech stocks have dropped sharply, but their valuations proceed to reflect AI optimism despite investor concerns in regards to the likely timing,” Goldman Sachs chief US equity strategist David Kostin wrote in a note to clients on Monday night.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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