The AI investment frenzy that began with the launch of ChatGPT over three years ago is showing signs of strain. Despite blockbuster earnings from NVIDIA, Oracle, and Broadcom, their stocks plunged last Friday as skepticism grows about the sustainability of AI-driven valuations. Wall Street now questions whether the "Magnificent Seven" tech giants—Apple, Microsoft, Alphabet, Tesla, NVIDIA, Amazon, and Meta Platforms—can justify their AI spending spree with real returns.

Even NVIDIA’s stellar results couldn’t halt its recent slide, while Oracle’s bonds neared junk status after revealing soaring AI infrastructure costs. Meanwhile, OpenAI’s $1.4 trillion data center ambitions face scrutiny as its losses mount. Analysts warn that if capital inflows slow, the entire AI ecosystem—from chipmakers like NVIDIA to cloud providers like CoreWeave—could unravel.

Wall Street’s concerns center on three trends: 1. **Funding Risks**: OpenAI and others rely on continuous external financing. Any hesitation from investors could trigger a domino effect. 2. **Unsustainable Capex**: Tech giants like Microsoft and Meta plan $400B+ in AI data center spending, but rising depreciation costs may squeeze shareholder returns. 3. **Valuation Reality Check**: While Nasdaq 100’s P/E of 26x pales next to the dot-com bubble’s 80x, speculative bets like Palantir (180x earnings) and Snowflake (140x) hint at pockets of excess.

The debate now isn’t whether AI is transformative—it’s whether the market has overpaid for that promise. As capital rotates toward industrials and energy, the AI trade faces its first true stress test.