The recent selloff in artificial intelligence stocks represents a necessary market correction rather than the end of the AI boom, according to Ian Weisberger, co-founder and CEO of institutional trading technology firm CoinRoutes.
In commentary shared with Crypto Briefing, Weisberger said strong demand for AI infrastructure continues to support the sector’s growth, although the increasing concentration of stock markets in a handful of technology companies poses broader risks to investors.
His comments come after weeks of volatility across global technology markets, as investors question whether the enormous spending on AI infrastructure can generate sufficient returns to justify elevated valuations.
The Philadelphia Semiconductor Index dropped 11.4% last week, while the Nasdaq Composite lost 4.5%, as semiconductor manufacturers and AI infrastructure companies faced renewed selling pressure.
AI valuations face scrutiny as infrastructure costs rise
The downturn has been driven partly by concerns over the sustainability of AI investment, particularly as rising borrowing costs make it more expensive to finance data centers and computing infrastructure.
Companies heavily exposed to the AI expansion have faced mounting pressure from investors demanding clearer evidence of profitability and sustainable revenue growth.
CoreWeave, one of the leading providers of AI cloud infrastructure, lost approximately 25% of its market value last week amid concerns about its debt obligations and the cost of expanding computing capacity.
The pressure has also reached private AI companies preparing to enter public markets.
Some existing and prospective investors in Anthropic have discussed lowering their valuation expectations for the company’s planned November initial public offering to approximately $1.5 trillion, down from earlier expectations of $2 trillion, according to Reuters.
The reassessment followed Anthropic’s disclosure that third quarter revenue increased 45% from the previous quarter to $16.8 billion. Although the company reported adjusted profitability, its revenue growth slowed from the previous quarter.
The potential valuation reduction reflects growing concerns about the enormous capital required to develop and operate advanced AI systems, despite continued strong demand for the technology.
Analyst warns of excessive concentration in technology stocks
Despite the downturn, Weisberger argued that the recent declines should not be interpreted as evidence that the AI boom is ending.
In commentary shared with Crypto Briefing, the CoinRoutes executive compared the latest selloff to Nvidia’s earlier decline following the emergence of competitive Chinese AI models.
“This selloff reminds me of what happened to Nvidia when the emergence of Chinese open-source AI sent its shares tumbling,” Weisberger said.
He noted that recent developments in Chinese AI chips have raised similar concerns about established semiconductor suppliers, including Samsung Electronics and SK Hynix.
“But I wouldn’t mistake this for the end of the AI boom. AI is a civilisation-changing technology, and we’re seeing chipmakers report record revenues,” he added.
While Weisberger remains optimistic about the industry’s long term prospects, he identified the increasing concentration of global equity markets as a more significant structural concern.
The S&P 500 has become increasingly dependent on a small number of major technology companies, leaving the broader index vulnerable to sharp declines when investors retreat from AI related stocks.
South Korea faces an even greater concentration risk, according to Weisberger, who estimated that Samsung and SK Hynix together account for approximately 48% of the KOSPI index.
“When two companies make up almost half an entire stock market index, it’s hard to call that a broad-based index anymore,” he said.
Both companies have benefited from surging demand for advanced memory chips used in AI systems, but their substantial index weight can amplify market volatility when semiconductor stocks decline.
The recent correction has also renewed concerns about whether competition from Chinese chipmakers could undermine the pricing power and growth expectations of established semiconductor manufacturers.
Nevertheless, Weisberger believes greater competition could ultimately strengthen the AI industry by reducing its dependence on a limited number of suppliers.
“The success of AI shouldn’t depend on just a few companies, and a more diversified industry would be a positive development,” he said.
Technology stocks showed signs of recovery on Monday, with semiconductor manufacturers and AI infrastructure companies rebounding after the previous week’s losses.
However, upcoming corporate earnings and spending forecasts from major technology companies could determine whether the recovery continues as investors seek stronger evidence that AI revenues can justify the industry’s growing infrastructure costs.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.