The fear that the AI bubble would burst struck hard this Monday at the brands that manufacture the components of your computer, because in the United States stock market Intel fell 8.8%, AMD 7.5% and Micron, one of the world’s largest RAM memory producers, 5.9%, while hard-drive makers Seagate and Western Digital lost about 8% and Dell, one of the major PC sellers, 7.4%, on a day when tech stocks erased the rebound they had shown in the morning.
Today’s drop adds to Friday’s, when Intel endured its worst day on the exchange since 1974, with a slide of 28.6%, so in just two days it had shed about 35% of its value—more than a third—while AMD posted a decline of around 18% in the same period, according to closing data compiled by TheStreet and StockTitan.
Why the fear of the AI bubble is growing
In recent years, major tech firms have spent staggering sums on data centers for artificial intelligence, and that spending is precisely what has absorbed memory demand and driven up the price of RAM you need for your gaming PC, but now investors are starting to doubt that so much money will translate into profits, because some companies reported weaker-than-expected results and others signaled that they will spend even more.
To complicate matters, a large portion of this race is financed with debt, as Oracle announced it would seek $20 billion in equity and bonds to finance its AI infrastructure, Microsoft issued $25 billion in bonds, and Meta and Alphabet are also taking on debt, something that, according to analysts cited by TheStreet, is causing the market to adjust its expectations for these companies.
The result was that the Nasdaq-100 finished more than 10% below its October 6 peak, which in market jargon is called a correction, and the tech sector of the S&P 500 fell 2.66% after having lost 4.2% on Friday.
What it means for PC players
The trouble for PC gamers is that the AI bubble is already catching up to them, because on Friday Intel CEO Lip-Bu Tan admitted that “in recent weeks, our customers have begun to signal a slowdown in PCs due to the price and availability of memory”, according to The Register.
Intel likewise projects that the PC-chip market will fall by 12% next year and is shifting part of its PC processor production toward data-center products, while Micron warned that memory shortages could last until 2028, in a scenario where DDR5 RAM has become more expensive than a PS5 Pro.
For now, a drop in shares does not automatically mean RAM prices or graphics cards will fall right away, because the shortage persists and data-center memory contracts are signed for multiple years, but it does show that the AI bet, the same one that raised the price of your next gaming PC, is beginning to cast doubt even among those financing it.
The only good news of the day came from Apple, which after hours posted a record year with $478.8 billion in sales, and all eyes now turn to AMD’s results this week, which could show how memory pricing is affecting graphics cards and processors for gamers.
