Goldman worries about AI industry's valuation; Nvidia (NVDA.US) once fell 3%

Shares of Nvidia (NVDA.US) fell as much as 3% on Wednesday, and had given up most of those losses by the time of writing, trading down less than 2% at $132.22. Other chip stocks followed lower, with TSMC (TSM.US) down more than 1.3%, Qualcomm (QCOM.US) down more than 1.7%, and Broadcom (AVGO.US) down nearly 2%.

According to a report released recently by a team of strategists at Goldman Sachs, including Amazon (AMZN.US), Meta Platforms (META.US), Microsoft (MSFT.US) and Google-C (GOOG.US), the tech giants have spent about $357bn on capital expenditure and research and development over the past year, with “a large portion” of that spending going towards artificial intelligence, accounting for nearly a quarter of the total capital expenditure and research and development of the S&P 500 index (SPX.US).

Goldman Sachs warned that the large-scale companies of today will eventually be required to demonstrate that their investments generate income and profits. If there are no signs of profitability, it could lead to a devaluation of the stock price.