AI Stocks Take a Hit as Valuations Concerns Rise

Palantir Technologies Inc. dropped 7.5% after a 9% decline on Tuesday, with Nvidia Corp. and Advanced Micro Devices Inc. also trading lower amid a broader tech-sector selloff. Investors are concerned about stretched valuations and shifting sentiment towards defense-linked AI companies. Wedbush analysts see the sell-off as an opportunity to own "core winners" in the AI ecosystem, with Nvidia's central role in the AI revolution and demand for its chips still outpacing supply.

A broader selloff in the tech sector has led to significant declines in several artificial intelligence (AI) stocks, including Palantir Technologies Inc. (PLTR), Nvidia Corp. (NVDA), and Advanced Micro Devices Inc. (AMD). The drop was attributed to concerns about stretched valuations and shifting investor sentiment towards defense-linked AI companies.

Palantir, which led the declines, fell by 7.5% after a 9% drop on Tuesday, trading at about $145. The reversal was attributed to profit taking, concerns about stretched valuations, and shifting investor sentiment towards defense-linked AI companies. Easing US-China tensions and progress in talks to resolve the Russia-Ukraine conflict have tempered enthusiasm for Palantir’s defense-heavy business model [3].

Nvidia Corp. also experienced a decline, dropping by 0.14% with a trading volume of 37.06 billion. The company's August 27 financial results are anticipated to be a catalyst for AI market momentum, according to Wedbush Securities. Additionally, HSBC has raised NVIDIA's target price from $125 to $200 [1].

Advanced Micro Devices Inc. dipped mildly by 0.81%, with the trading volume of 9.80 billion. AMD released FidelityFX SDK 2.0 at the Gamescom, providing support for FSR 4.0.2 and FSR Redstone neural rendering. AMD confirmed Radeon RX 9060 graphics card is initially for OEM channels, with possible future retail availability [1].

The selloff comes as investors are reassessing the valuations of AI stocks, which have seen significant growth over the past year. Wedbush analysts see the sell-off as an opportunity to own "core winners" in the AI ecosystem, with Nvidia's central role in the AI revolution and demand for its chips still outpacing supply [1].

References:
1. [https://www.ainvest.com/news/massive-trading-volumes-nvidia-leads-ai-momentum-2508/](https://www.ainvest.com/news/massive-trading-volumes-nvidia-leads-ai-momentum-2508/)
2. [https://www.ainvest.com/news/nvidia-dominance-valuation-ai-era-justifying-premium-2508/](https://www.ainvest.com/news/nvidia-dominance-valuation-ai-era-justifying-premium-2508/)
3. [https://www.proactiveinvestors.com/companies/news/1077050/palantir-drops-sharply-as-valuation-concerns-drive-ai-selloff-1077050.html](https://www.proactiveinvestors.com/companies/news/1077050/palantir-drops-sharply-as-valuation-concerns-drive-ai-selloff-1077050.html)