A notable number of stocks within the S&P 500 index have recently entered bear market territory, experiencing declines of over 20% from their peak values recorded on October 29th. This downward trend is largely attributed to the perceived bursting of the artificial intelligence (AI) stock bubble, causing widespread concern among investors regarding the sustained growth prospects of AI-related enterprises. While the overall S&P 500 index may not yet be in a full bear market, several prominent companies are already contending with substantial financial setbacks, highlighting a shift in market sentiment and investment strategies.
The impact of the AI stock downturn is particularly evident in the performance of companies like Super Micro Computer (SMCI) and Dell Technologies (DELL). Super Micro Computer has seen its stock plummet by 35% from its high point, with its Relative Strength (RS) Rating falling to 51 and Earnings Per Share (EPS) Rating to 60. Analysts project a mere 1% increase in EPS for the company in 2026, reflecting diminished growth expectations. Similarly, Dell Technologies has witnessed a 25% drop, with its RS Rating declining to 64. Despite this, analysts remain cautiously optimistic, forecasting profit increases of 17% in 2026 and 18% in 2027 for Dell.
This significant erosion of value in individual stocks, including those heavily involved in the AI sector, underscores the volatility and interconnectedness of the market. The struggles faced by these companies serve as a stark reminder that even robust sectors can experience sudden and severe corrections. Investment strategists are now closely monitoring these developments, debating whether these localized bear markets are precursors to a broader market decline or isolated adjustments within a specific industry.
Beyond Super Micro Computer and Dell, several other S&P 500 companies have also entered bear market territory, with declines exceeding 20% since the October 29th high. This list includes Axon Enterprise, Coinbase Global, Chipotle Mexican Grill, Block, Generac Holdings, Arista Networks, EMCOR Group, Norwegian Cruise Line Holdings, DoorDash, Baxter International, and Oracle. These widespread losses demonstrate that the financial repercussions of the AI bubble’s deflation are not confined to a handful of companies but are influencing a diverse range of industries, from technology and financials to consumer discretionary and healthcare sectors.
The current market landscape is characterized by increasing apprehension regarding the sustainability of the AI boom. Experts like Brent Schutte, chief investment officer of Northwestern Mutual Wealth Management, acknowledge the difficulty in predicting a full market downturn but emphasize the undeniable and growing unease about the long-term viability of the rapid growth seen in AI-related investments. This sentiment suggests that investors are becoming more cautious, scrutinizing company fundamentals and future growth projections more closely, particularly for those heavily reliant on the AI sector. As the market continues to evolve, the performance of these companies will be a key indicator for the broader economic outlook.