11/19 U.S. stocks fall as AI wobbled by bubble warnings eyes Nvidia after reviving at $1 trillion Saudi
The U.S. stock market led the decline in semiconductor and large technology stocks following the previous day’s announcement by CEO Pazia Alphabet that there are “irrational elements” in AI investment. On top of that, news of a downward revision of investment opinions due to controversy over monetization of MS (-2.70 percent) and Amazon (-4.43 percent) was also affected. However, amid the influx of backlash buying, the index shrank as Trump and Bin Salman mentioned permission to export large-scale chips and expansion of investment. Of course, right before the close of the market, anxiety continued ahead of the announcement of NVIDIA (-2.81 percent), and anxiety continued to remain weak (Dow -1.07%; Nasdaq -1.21 percent; S&P 500 -0.83 percent; Russell 2000 +0.31 percent; Philadelphia Semiconductor Index -2.31%)
*Variants: AI bubble controversy, U.S.-Saudi talks
Google CEO Pichai evaluated the flow of AI investment as a surprising moment, but noted that there is an “irrational element.” Markets expressed concern that it reminded them of Fed Chairman Greenspan’s warning of “irrational overheating” during the IT bubble. Pichai noted that if the AI boom collapses, “no company will be okay, and Google is also burdened.” This reflects the debate over AI valuation sustainability and concerns about market overheating. In addition, AI claims that it needs a lot of energy and will delay achieving its carbon neutrality goal. When the related remarks were made public, semiconductor companies as well as large technology stocks were sluggish in the early days of the market, causing the index to fall.
Meanwhile, it is also noted that Rothschild downgraded its investment opinion to neutral from buy for MS (-2.70%) and Amazon (-4.43%). Rothschild expressed concern that despite long-standing optimism about AI stocks, the economics of building Generative AI infrastructure is much weaker than expected. In addition, it designated that data center construction is much more capital intensive than initial cloud infrastructure and requires six times more capital to create the same value. In addition, the NPV, which is generated per dollar of Generative AI infrastructure at net present value (NPV), is only 20 cents, significantly lower than the $1.4 for the mature cloud industry. The controversy over monetization was highlighted in early trading, which encouraged the decline of cloud-related companies, including large tech stocks.
Later in the day, expectations for a meeting between U.S. President Trump and Saudi Crown Prince Bin Salman flowed into the market, and the index rebounded. Crown Prince Bin Salman announced that he would expand his existing $600 billion investment to $1 trillion and sign agreements in various fields such as AI, materials, and rare earths. In addition, he said he would use a lot of computing power to maintain Saudi growth, arguing that there is no limit to cooperation with the U.S. Trump mentioned Saudi Arabia’s involvement in the AI sector and negotiations to approve certain levels of chip exports. As a result, the possibility of expanding large-scale AI investment was highlighted, the fall was reduced mainly in semiconductor stocks, and the index was also reduced
*Features: MS, Amazon, Nvidia, Tesla Slump
Big Tech Stocks: MS, Amazon Fall On Downgrades On Investment Opinion On Monetization Concerns
MS (-2.70 percent) invested $5 billion in Antropics, Nvidia invested $10 billion in Antropics, and Antropics announced the use of MS Cloud Azure worth $30 billion and the introduction of Nvidia’s next-generation chip in return, but fell. One of the recent controversies over the AI bubble is due to this cyclical structure. In addition, Rothschild downgraded its investment stance to neutral from buy, saying that massive investment and monetization are burdensome along with Amazon (-4.43 percent). The controversy over profitability also affected the decline of Meta (-0.72 percent) and Alphabet (-0.22 percent). However, Alphabet has remained solid, shifting upward after launching Gemini 3.0 in all product lines. Apple (-0.01 percent) closed weakly reflecting expectations for efficiency of capital spending.
Semiconductors: Fell sharply amid AI bubble controversy, but fall shrinks due to Saudi issue
Nvidia (-2.81%) fell an additional 3.7% as the AI bubble controversy was highlighted, but increased volatility after the fall was reduced in the second half of the market due to Trump’s mention of permission to export semiconductor chips. AMD (-4.25%), Micron (-5.56%), and TSMC (-1.45%) also declined after falling sharply, but the volatility increased as it still reflects anxiety about Nvidia’s performance ahead of the market close. Broadcom (-0.63%) rose by announcing that it would expand its strategic partnership with NEC Copper to introduce a private cloud, but fell again before the market closed. SanDisk (-7.88%) also plunged 13% at one point, and many semiconductor companies, including Western Digital (-5.90%), fell sharply amid controversy over the AI bubble, but there is still anxiety over Nvidia’s performance, with volatility expanding after shrinking its fall in the second half of the market. Philadelphia Semiconductor Index fell 2.31%
Cars: Tesla Cuts Decline As Nvidia Earnings Wait
Tesla (-1.88%) fell 3.7 percent while waiting for Nvidia’s performance results, but the fall was reduced as the index rebounded in the second half of the market. The market evaluates that Nvidia’s performance is important because AI is the most important area in FSD and robots, such as Tesla using AI to train cars. Eventually, if the AI bubble controversy eases after the Nvidia earnings report, if Tesla’s stock price rebound and fails to ease the AI bubble controversy, it will weaken along with Nvidia and other semiconductor companies. Rivian (+0.81%) and Lucid (+0.43%) rose. Secondary batteries such as QuantumScape (+0.15%) and lithium-related stocks such as Albemarle (+3.14%) rose. Ford (+1.09%) succeeded in rebounding from the announcement of used car sales to Amazon, while GM (+0.03%) also rose slightly.
Chinese Companies: Pinduoduo Downs Expand Vs. Baidu Upward Transition
Pinduoduo (-7.33 percent) fell sharply as sales fell slightly below expectations due to intensifying competition. Notably, competition is taking place almost everywhere, including Alibaba (+1.27 percent), Jindong (-0.30 percent) and online commerce including food delivery. On top of that, executives are concerned about the slump in the Chinese consumer market