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<\/p>\n Email Link<\/p>\n \n A version of this story appeared in CNN Business\u2019 Nightcap newsletter. To get it in your inbox, sign up for free here<\/a>.\n<\/p>\n \n Rather suddenly, there\u2019s been a vibe shift around artificial intelligence, the tech that\u2019s hypnotized Wall Street and inspired cultish devotion across Silicon Valley over the past three years.\n <\/p>\n \n And while it\u2019s too soon to declare August 2025 the start of the AI winter, or the AI correction, or the AI bubble bursting, or whatever slowdown metaphor you prefer, it is undeniable that a series of industry stumbles is making investors, businesses and customers do a double-take.\n <\/p>\n \n Among them:\n <\/p>\n Meta, which was recently shelling out $100 million signing bonuses for AI talent, has instituted a hiring freeze<\/a> and is reportedly looking at downsizing<\/a> its AI division.<\/p>\n Sam Altman, the CEO of OpenAI and the industry\u2019s biggest hype man, is floating the word \u201cbubble\u201d in media interviews.<\/a><\/p>\n ChatGPT-5, billed by OpenAI as a PhD-level game-changer, is a flop.<\/a><\/p>\n Coreweave<\/a>, a cloud computing company backed by Nvidia, has shed nearly 40% of its value in just over a week.<\/p>\n Researchers at MIT published a report showing that 95% of the generative AI programs<\/a> launched by companies failed to do the main thing they were intended for \u2014 ginning up more revenue.<\/p>\n Anthropic and OpenAI have struck deals to give their products to the US government for next to nothing \u2014 even as they are burning through cash and lack demonstrable paths to profitability.<\/p>\n \n All of that has sent traders rushing to buy \u201cdisaster puts\u201d \u2014 options that act as a kind of insurance for when the market drops \u2014 in case we\u2019re about to relive the late-90s dot-com bust. Per Bloomberg<\/a>, investors aren\u2019t just preparing for a pullback, they\u2019re bracing for a nosedive.\n <\/p>\n \n \u201cI suspect this will lead to a larger correction,\u201d Mike O\u2019Rourke, chief market strategist at JonesTrading, told me, noting that Meta dangling NFL-like compensation packages to attract AI engineers was \u201ca sign the spending was going over the top.\u201d\n <\/p>\n \n The tech stocks that have been propping up the entire market, including Nvidia (NVDA<\/a>), Microsoft (MSFT<\/a>) and Palantir (PLTR<\/a>), tumbled this week<\/a>. (Of course, Wall Street is weighing a lot more than just some bad headlines for the tech sector. There\u2019s also tariffs, mixed retail earnings, and, not least, the president of the United States\u2019 campaign to install loyalists at the Federal Reserve<\/a>. That central bank drama is piling even more attention Friday\u2019s speech by Fed Chair Jay Powell<\/a>, who even in precedented times can move markets with a single furrow of his brow. You\u2019ll be able to hear a pin drop across Wall Street as investors tune in at 10am ET.)\n <\/p>\n \n For some investors, the tech pullback is \u201cjust a pause that may refresh as investors retrench and rethink how they want to position their tech dollars,\u201d Rob Haworth, senior investment strategy director at US Bank Asset Management Group, told my colleague John Towfighi this week.\n <\/p>\n \n Maybe. But the ups and downs of the market are just one measure of AI\u2019s impact, and even some of AI\u2019s biggest critics say the downfall won\u2019t happen overnight.\n <\/p>\n
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