As concerns about the sustainability of the artificial intelligence investment boom intensify, AI bubble theories are once again gaining momentum, triggering consecutive declines in technology stocks over two trading days.

On Wednesday, tech stocks fell for the second consecutive trading day, with the tech-heavy Nasdaq Composite Index declining 0.7%, leading losses among major indices. The previous day, the index had already dropped 1.5%. Market doubts about the sustainability of the AI boom continue to escalate.

According to data from analytics firm S3 Partners, investors shorting AI-related stocks have reaped substantial profits during this market correction. Over the past two trading days, short positions targeting a basket of AI concept stocks have generated up to $5.6 billion in realized and unrealized profits for investors.

Behind this selloff are warnings from industry leaders and a research report. According to The Verge's report last Friday, OpenAI CEO Sam Altman stated that while AI is "the most important thing in a long time," the technology may be in a bubble similar to the early 2000s internet bubble. Additionally, media reported on Monday that researchers from MIT's Project NANDA released a report claiming that 95% of the companies they studied received no returns from AI.

Tech Giants Under Pressure, Short Sellers Profit $2.8 Billion

Among the companies known as the "Magnificent Seven" tech giants, Meta Platforms, Inc. suffered the biggest impact, with its stock price declining 4% over the past five trading days. During the same period, chip giant NVIDIA's stock price fell 3.8%.

Other tech giants were not spared either. Microsoft and Apple's stock prices both dropped nearly 3%, while Google's stock price declined 1%. Data shows that short bets against just these five companies generated over $2.8 billion in profits for investors over the past two days.

Beyond major tech companies, some AI-related firms experienced even steeper declines. Chipmaker AMD's stock price fell more than 10% over the past five trading days. During the same period, Broadcom and Micron also saw their stock prices drop more than 5%.

As an AI data center company that leases computing power to firms like Microsoft and Meta Platforms, Inc., CoreWeave is viewed as a "pure play" in the AI sector. Its stock price plummeted 21% over the past five trading days, demonstrating the concentrated impact of the sentiment reversal on this sector.

Meta at the Center of Attention, Short Sellers Make Heavy Bets

As a focal point in this round of declines, Meta Platforms, Inc. has been doubling down on AI investments, spending billions of dollars on acquisitions in recent months alone and offering nine-figure compensation packages to researchers at its Meta AI lab.

However, reports suggest that the parent company of Facebook and Instagram is seeking to reduce the size of its AI division. Against this backdrop, investors have placed $4.7 billion in short positions against Meta Platforms, Inc. over the past seven days. These bets have generated over $1.1 billion in returns for investors over the past two days.

Intelligence technology provider Palantir has been one of the biggest losers in the recent market rotation. Palantir's stock price had surged more than 150% from its April lows, but the stock has now declined for five consecutive trading days, marking its longest losing streak since March, with cumulative losses exceeding 15%. According to S3 Partners data, investors shorting the stock have profited over $1 billion from their positions over the past two days.