U.S. Tech Sell-Off Traced to MIT’s “AI Divide” Report — What It Reveals Is Spooking Investors

TradingKey - On Tuesday, August 19, the Nasdaq Composite, heavily weighted toward technology stocks, plunged 1.4% — its largest single-day drop since August began. Nvidia posted its worst daily loss since April. Market participants attributed the sudden tech selloff to growing fears of an AI bubble, fueled by recent comments from OpenAI CEO Sam Altman and a new report from MIT.

By Tuesday’s close, key AI-focused tech stocks had tumbled:

• Nvidia: Down 3.50%
• AMD: Down 5.44%
• Oracle: Down 5.80%
• Palantir: Plunged 9.35%

Palantir Stock Pullback, Source: TradingKey

Altman, in a recent interview, acknowledged that investors are collectively in a phase of excessive excitement about AI. He projected that OpenAI alone will spend trillions of dollars building data centers in the near future — a scale so vast that he expects economists to eventually step forward and say, “This is crazy.”

Altman added that some investors will likely lose a lot of money, a reality he does not want to downplay. While AI will go through periods of irrational exuberance, he believes the long-term societal value will be immense.

The more immediate trigger for Tuesday’s tech selloff was a report released by MIT on Monday. In a study titled “The GenAI Gap: State of Business AI in 2025”, MIT revealed that 95% of organizations are earning zero financial return from their investments in generative AI — a stark contrast to the surge in U.S. stock prices to record highs driven by AI speculation in recent months.

A trader at a tech-focused fund said:

“The story is spooking people.”

The MIT report found that only 5% of comprehensive AI pilot programs are generating millions of dollars in value, while the vast majority remain stuck, with no measurable impact on profit and loss.

Analysts noted that Tuesday’s shift in market sentiment reflects the fragility of stock valuations amid sky-high multiples and growing concerns about AI’s ability to generate real profits.