Without much warning, the leading suppliers in the artificial intelligence market sold off on Thursday. The Nasdaq (QQQ) lost 1.95%, led by Nvidia (NVDA) down by 5.57%, and Alphabet (GOOG) down by 2.78%. Selling spread to the EV market, where Tesla (TSLA) lost 8.44%.
Rumors circulated that Tesla would delay its robotaxi launch from August to as late as October.
The market’s panicked selling is unusual. On Thursday morning, the Bureau of Labor Statistics posted consumer price index for June falling by 0.1%. That would support the market’s assumption that the Federal Reserve would cut interest rates by 25 bps in September.
The lack of meaningful profitability for chatbox implementations is a substantial worry. Meta Platforms (META), Alphabet, Amazon (AMZN), and Microsoft’s (MSFT) ChatGPT are all building similar AIs. Apple will launch Apple Intelligence, powered by ChatGPT. Unfortunately, those large language models are competing with each other. Customers may scoff at paying a modest $19.95 per month for each service.
Risks are high that AI service providers will compete much like streaming services today. Disney (DIS), Amazon Prime, Paramount+ (PARA), and Warner Bros Discovery (WBD) started subscriptions at low prices. As costs rose, they raised prices, which may lead to higher customer losses.
AI stocks may not have peaked yet but risks are higher that more selling pressure will hurt their share price.
