About a month ago, I still saw a balanced mix of AI bulls and bears on social media. But for the last two weeks, it’s been overwhelmingly bearish—calling it an AI bubble, comparing it to the dotcom crash.
Perhaps this one-sided bearish tone has affected investor psychology, prompting some to sell their AI-related stocks and exacerbating the decline.
I think we shouldn’t underestimate the impact of social media on financial markets today. Just like how digital banking apps can cause bank runs faster—since withdrawals are instant—social media and digital trading apps can drive one-directional moves in a short span of time.
So it could be a case where some AI investors were already thinking of selling but wanted to wait for Nvidia’s results. And once the good results pushed the share price higher, it became an even better opportunity for them to take profits.
Some attributed it to the September jobs report, which showed unemployment creeping up to 4.4%—the highest since October 2021. But this is unlikely the reason. The report was released before the market opened, and pre-market prices were still bullish. And if anything, higher unemployment actually increases the odds of further rate cuts, which should boost stocks.
Nvidia’s earnings was the most anticipated event as investors wondered if the AI capex outlook remains rosy and voluminous.
Finally nividia delivered, and the stock market breathed a sigh of relief. Nvidia jumped 6% on market open and the Nasdaq Composite was up 2%. All AI-related stocks rallied.
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