As the technology markets enter another correction cycle, one thing is becoming clear: the euphoria surrounding artificial intelligence is meeting a reality check. At YourNewsClub, we see that the capital that has poured freely into the AI sector for nearly two years is starting to retreat. The reason is simple – expectations are expanding faster than profits.
The downturn began in the U.S., where after a sharp decline in Nvidia and Palantir, concern deepened when hedge fund manager Michael Burry – famous for predicting the 2008 housing crash – revealed a massive bet against the two AI giants. His fund bought options that would pay out if their stock prices fell, suggesting he views current valuations as “irrational.” The shock spread across Asia: Japan’s Nikkei 225 dropped 2.5%, SoftBank fell more than 10%, and South Korea’s Samsung and TSMC declined by roughly 4% and 3%, respectively.
According to Jessica Larn, who studies the political economy of technology, “The AI market is becoming a mirror image of 1999 – belief in limitless technological growth is replacing sober analysis of profitability.” Indeed, AI sector valuations now exceed those of the dot-com era. Companies are pouring billions into compute infrastructure without clear returns on investment.
At YourNewsClub, we note a deeper imbalance behind the record-high valuations: AI revenues are growing far more slowly than infrastructure expenses. Giants like SoftBank and Amazon – which recently signed a $38 billion partnership with OpenAI – are aggressively expanding their AI portfolios, yet profit growth has stalled. Amazon’s 1.8% share drop and Nvidia’s near-4% decline this week signal investor fatigue with the “AI forever” narrative.
Alex Reinhardt, who analyzes the intersection of finance and infrastructure systems, adds: “AI is no longer just a technology market – it has become a liquidity layer. The capital flows into it are so massive that any correction will ripple through the global system.” With tech stocks now making up more than 36% of the S&P 500, even minor pullbacks have broad systemic effects.
In reality, this correction does not end the AI story – it matures it. Investors are shifting from indiscriminate enthusiasm to selective positioning. Data shows that companies demonstrating measurable monetization of AI, particularly in automation and analytics, are holding ground, while speculative ventures are losing up to 15% of market cap per week.
We at Your News Club anticipate that 2025–2026 will mark the beginning of structural consolidation across the AI sector.The winners won’t be those who talk loudest about the future, but those who can convert compute power into durable business models. Investors should focus on free cash flow rather than hype, and companies should prioritize efficiency over expansion.
AI will remain a structural engine of the global economy – but its gold rush is ending. The next era belongs to disciplined growth, where algorithms must not only inspire, but also earn.