Is the AI Bubble Really Here? Broadcom Plunges Nearly 15%, Micron Loses $1,000 Mark

TradingKey - Concerns over an AI bubble continue to escalate as AI stocks including Broadcom, Micron, and Nvidia fell collectively, potentially triggering a wave of AI-related panic.

During pre-market trading on June 4, Eastern Time, artificial intelligence (AI) concept stocks experienced a widespread decline, among which Broadcom ( AVGO) plummeted nearly 15%, retreating to around the $400 mark; Micron ( MU) fell approximately 7%, briefly losing the $1,000 level; SanDisk ( SNDK) dropped about 6%, Western Digital ( WDC) fell 4%, and Nvidia ( NVDA) dropped over 1%.

Broadcom stock price chart, Source: TradingView

Yesterday, Ray Dalio, founder of Bridgewater Associates, compared the current AI situation to the 2005 internet era at the Forbes Iconoclast Summit. He believes the current market has already exhibited three bubble signals: high valuations, prevalent speculation, and paper wealth growth far outstripping cash flow expansion.

Similarly, Robert Cohen, a portfolio manager at the prominent U.S. fixed-income asset management firm DoubleLine Capital, also expressed similar views on an AI bubble. On the same day, at the Bloomberg Global Credit Forum in New York, Cohen stated explicitly, "What is the likelihood that we are in an AI bubble? I would say it's 100%."

Furthermore, Broadcom's financial guidance indirectly supported this view. Yesterday, Broadcom's latest announcement showed it did not raise its full-year AI chip sales target, which fell short of market expectations and directly ignited investor fears, leading them to suspect that corporate capital expenditure on AI may have already reached its peak.

Faced with the growing narrative of an AI bubble, Nvidia CEO Jensen Huang offered a public rebuttal at the Computex Taipei exhibition, seeking to dispel concerns over AI investment and long-term profitability by touting AI returns. Huang stated, "Only crazy people would question the ROI of AI investment, because this technology has already created trillions of dollars in value," and emphasized that "its profitability right now is incredibly high."

Before a bubble fully forms, any argument holds some validity, making it difficult to determine whether Dalio or Huang is more reliable. However, judging from current market reactions, investors are clearly panicking. This is reflected not only in the U.S. market but also in the recently hot Japanese and South Korean stock markets, which weakened today as AI stocks like Samsung, SK Hynix, SoftBank, and Kioxia also declined.