Technology investors were used to a good thing – positive momentum that did not seem to stop. Giants In the industry, the Nasdaq led to two years of double digits profits and the individual shares themselves offered shareholders astonishing return. For example, Nvidia (Nasdaq: NVDA)The world’s leading artificial intelligence (AI) chip designer, saw the stock rise 1,600% over the past five years, and Palantir TechnologiesAn AI-driven software player has more than 800% more than 800% since the 2020 debut. And that is just to mention two of the striking players. Many others also generated great profit for investors.
Why such excellent performance? In these shares, investors stacked optimism on the future of AI, a technology that could join others such as electricity or internet on the list of ‘game changers’. That is because AI offers the potential to save time, energy and costs for companies – and even to lead to new discoveries.
In recent weeks, however, various headwinds have been on shares in this dynamic field. Investors were worried about the US export controls on chips to China, the American implementation of rates to three major trading partners and general uncertainty about the economy. The Nasdaq has led to a decrease of more than 7% in the past two weeks, while some of the greatest members tumbled. But before you turn their back on the technical sector, hold on. Here are three reasons why technical investors should not worry too much about the recent falls in AI shares.
Image source: Getty images.
As mentioned, an important theme that weigh on the market is the 25% rates of President Donald Trump about the import from Mexico and Canada and a rate of 20% on the import from China. Technology companies produce many of their parts and products outside the US, which means that they can soon be confronted with higher prices.
The White House says that the rates are a reaction to a stream of fatal medicines to the US and noted that the move “until the crisis was illuminated”. We do not yet know how long the current trade war will last, but this is a first sign that the rates are temporary.
So yes, the rates are a challenge today, but some of the world’s largest and very profitable technical players such as Nvidia or Apple Must be able to manage these times – and succeed in the long term.
Regarding export checks on chips to China, these may not be temporary, but they can be manageable. Implemented in 2022, they have already reduced the sale of NVIDIA in that country by half compared to pre-control days, but Nvidia still raised worldwide growth of triple figures to $ 130 billion, a record, a record, in the last tax year that the problem was not disastrous for profit.
Of course, before investing in a chip player, it is important to see exactly how dependent the company is in China. But if, like Nvidia, it grows considerably due to the sale in other parts of the world, the player can still make a big investment.
Although the AI Boom has already delivered billions of dollars in income to companies such as Amazon” AlphabetAnd of course, Nvidia, we are actually in the early days of the story of this hot technology. The AI market of $ 200 billion is expected to reach over the end of the decade towards the end of the decade, which offers AI giants a lot of room for growth.
It is also important to remember that we are still in the Build-Out phase of the infrastructure, whereby Cloudservice Providers expand data centers to meet the demand and customers that launch new AI programs. But at the same time we continue to another important growth phase with the application of AI to problems in the real world.
Here are AI agents or software that is designed to solve a complex problem and bring a solution into action, ready to work at certain companies, to streamline their activities and to stimulate income. In a call center, for example, an AI agent can handle initial questions and questions. Providers of chips to design these agents and companies that they both use must benefit from growth as this phase develops.
All this means that the AI option is not nearly over and many companies must continue to generate considerable revenue growth.
The positive signs, which indicate investments and growth, have been piled up in recent weeks. Meta platforms Said that this year it is planning to invest no less than $ 65 billion to support his AI initiatives. The company wants to build a data center that is so large that it would cover a large part of Manhattan, and Meta will end the year with more than 1.3 million graphic processing units (GPUs) or chips to provide AI.
Earlier this year, OpenAi announced the Stargate project, a project aimed at investing $ 500 billion in the next four years to expand the AI infrastructure in the US
And Nvidia recently said that the demand for his new Blackwell architecture was “extraordinary” and the platform generated $ 11 billion in income in the first quarter of commercialization.
These are just a few examples, but they reflect the general AI scene where investments and development take place at a rapid pace and high level. As is apparent from the Blackwell income figure and due to the income of millions of dollars at the cloud companies of Alphabet and Amazon, AI investments are bearing fruit.
This and the two points above may not mean the time to turn away from AI investments, but instead to jump in and buy on the dip.
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Go on “
*Stock Advisor Return on March 3, 2025
John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of the Motley Fool. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and Sister of Meta Platforms CEO Mark Zuckerberg, is a member of the Motley Fool’s Board of Directors. Suzanne Frey, a director of Alphabet, is a member of the board of directors of the Motley Fool. Adria Cimino has positions in Amazon. De Motley Fool has positions and recommends alphabet, Amazon, Apple, Meta Platforms, Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
3 Reasons why technical investors should not worry too much about the tumbling of artificial intelligence (AI) shares This week was originally published by the Motley Fool
