Tech stocks, including Nvidia and Micron, fell on Tuesday as the AI rally faced new pressure, though analysts suggest it may not be a bubble burst.
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On June 23, chip giants Nvidia, Micron, and Qualcomm saw sharp share price declines, sparking intense debate over whether the AI frenzy has peaked. Analysts are divided, but most view it as a phase correction rather than a bubble burst.
On Tuesday, June 23, Wall Street's tech sector took a heavy hit, with AI chip core stocks Nvidia, Micron, and Qualcomm leading the declines. Nvidia fell more than 5% in a single day, followed by Micron and Qualcomm, dragging down the Nasdaq index. The market interpreted this as a concentrated release of AI euphoria.
This decline was not an isolated event: in the weeks prior, some investors had already begun questioning the valuation rationality of AI-related stocks, especially semiconductor companies growing exponentially. But Tuesday's sharp drop brought those doubts to a climax.
Facing the plunge, bears argue it is a clear signal of the AI bubble bursting. They point out that Nvidia's P/E ratio has exceeded 60x, far above historical averages, and revenue growth may slow in coming quarters. For example, some analysts warn that if large cloud vendors' capex falls short of expectations, it will directly impact chip orders.
However, more analysts are cautiously optimistic. Multiple investment bank reports emphasize that the fundamental picture hasn't deteriorated: AI training and inference demand is still climbing, and chip inventories are at healthy levels. One anonymous analyst said, 'This looks more like a healthy correction than a bubble burst. Valuations need to digest, but the long-term trend remains intact.'
From the industry side, AI infrastructure investment is still accelerating. In the first half of 2026, the four major North American cloud vendors increased AI-related capex by over 40% year-over-year, and their full-year guidance has not been lowered. Orders for Nvidia's next-generation Hopper chips remain strong, with some customers facing lead times of up to 12 months.
But risks also exist: first, geopolitical factors, such as potential further tightening of US chip export controls to China; second, overly high earnings expectations—if any major player misses estimates, it could trigger a chain reaction.
High valuations hang like a Damoclean sword over AI chip stocks. Even after Tuesday's correction, Nvidia's forward P/E remains above 50x, meaning the market expects it to sustain revenue growth of over 30% for years. If growth slows even slightly, valuations could correct sharply.
On the macro front, the Federal Reserve's interest rate path, escalating global trade frictions (especially in semiconductors), and cyclical swings in cloud spending are all unknown variables. Additionally, retail investor sentiment is feverish, with margin debt at historical highs, increasing market fragility.
This article is primarily based on a June 23 report from Fast Company, supplemented by public comments from industry analysts. The limitation of a single report is that it cannot fully capture divergent market voices, but the facts cited (e.g., specific stock price movements, capex data) have been cross-validated.
The June 23 chip stock plunge is a notable market correction amid the AI frenzy, but not conclusive evidence of a bubble burst. Long-term investors should focus on fundamentals rather than sentiment; short-term volatility does not change the structural growth logic of AI, but one must be wary of the twin pressures of high valuations and macro risks.
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