Tech stocks head south as investors see that growth in AI may not be limitless

Jim Edwards is the executive editor for global news at Fortune. He was previously the editor-in-chief of Business Insider's news division and the founding editor of Business Insider UK. His investigative journalism has changed the law in two U.S. federal districts and two states. The U.S. Supreme Court cited his work on the death penalty in the concurrence to Baze v. Rees, the ruling on whether lethal injection is cruel or unusual. He also won the Neal award for an investigation of bribes and kickbacks on Madison Avenue.

The Nasdaq 100 closed down 1.22% on Friday and while U.S. markets are closed today for the Labor Day holiday, futures contracts for the index are not: They’re trading flat this morning, implying that investors are not expecting much from tech stocks once the opening bell rings in New York on Tuesday.

The Nasdaq 100 closed down for the month of August (-0.16%) even though the broader S&P 500 was up 3.56%.

Tech stocks were dogged all month

As Jim Reid and his team of analysts at Deutsche Bank said this morning: “Nvidia (-3.32% on Friday) was a major driver of this softness, losing ground after Marvell Technology’s outlook raised doubts over demand for data-centre equipment and as China’s Alibaba unveiled a new AI Chip. Last Wednesday Nvidia’s results had delivered a modest quarterly beat but saw slowing revenue growth for the data centre division, in part due to a pause in sales of AI chips to China.”

Marvell Technology is based in Santa Clara, California, and makes semiconductor chips. It has a partnership with Nvidia. On its fiscal Q2 2026 earnings call on August 28, CEO Matt Murphy said, “We expect overall data center revenue in the third quarter to be flat sequentially.” Flat is not up, and that sent Marvell’s stock down 19% the next day. (In May, Marvell cancelled its investor day presentations, citing macroeconomic uncertainty.)

That disappointment came after Nvidia’s earnings call the day before. The company reported robust data center revenue growth but it was nonetheless below analyst expectations.

And then there is Super Micro Computer Inc, another chipmaker buoyed

Shakiness in AI stocks could have consequences for the broader market. The “Magnificent 7” tech companies (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia, and Tesla), which have all placed large bets on AI, are currently worth 34% of the entire market cap of the S&P 500.

Here’s a snapshot of the markets globally this morning: