AI-related stocks declined broadly this week despite strong earnings from several companies. The weak market reaction points to growing investor doubts about whether the boom can last. Some third-quarter revenue results likely would have generated considerable investor enthusiasm last year.
Meta, a hyperscaler, lost 9.4% this week. Comfort Systems, an HVAC supplier linked to AI construction, fell 19.3%. Quanta, an engineering and construction company, declined 13.5%. Turbine manufacturer GE Vernova dropped 11.5%. Bloom Energy fell 12.7%. GE Vernova and Bloom Energy are investments linked to AI power demand.
Meta reported third-quarter results on Wednesday that exceeded expectations and raised the company's outlook. Meta shares dropped 7% the following day. Comfort Systems reported better-than-expected results on Thursday, with an order backlog nearly twice the year-earlier level. Comfort Systems has experienced rapidly growing sales of cooling equipment for data centers. Comfort Systems shares fell 9.3% on Friday. Western Digital, which makes hard disk drives that have become essential data-center components, reported earnings on Thursday. Western Digital's earnings per share increased 161% from a year earlier. However, Western Digital shares declined 3%.
The losses extended beyond companies announcing earnings. Many AI-related investments that were popular last year ranked among the S&P 500's weakest performers this week. Those stocks included engineering and construction companies Quanta, EMCOR and Vertiv. Semiconductor equipment companies KLA and Lam Research also appeared among the weak performers. Coherent, which makes fiber-optic cables that connect large groups of servers, was another weak performer. AI-related investments have experienced earlier confidence shocks, including concerns surrounding DeepSeek in early 2025.
The failure of AI-related shares to generate investor enthusiasm poses a significant problem for the broader market. A rough estimate puts AI-related shares at more than 50% of the S&P 500's market capitalization, using the technology sector plus Meta, Amazon and Alphabet as a proxy. AI-related sales also matter substantially to many non-technology companies in the index. The broader market may struggle to keep advancing if AI-related stocks stop delivering gains.
AI-Related Stocks Decline Amid Investor Doubts
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Summary
Investor sentiment turned cautious this week as AI-related stocks fell broadly, despite strong earnings from key players. Meta, Comfort Systems, Quanta, GE Vernova, and Bloom Energy all saw share prices drop. The fear and greed index shows growing unease, with AI-linked stocks among the S&P 500's worst performers. The decline reflects shifting investor sentiment, even after some companies beat expectations.
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