3 Reasons Tech Investors Shouldn't Worry Too Much About Tumbling Artificial Intelligence (AI) Stocks This Week

Adria Cimino, The Motley Fool

Sat, Mar 8, 2025, 1:50 AM 6 min read

Technology investors had gotten utilized to a bully happening -- affirmative momentum that seemed unstoppable. Giants successful the manufacture led the Nasdaq to 2 years of double-digit gains -- and the idiosyncratic stocks themselves offered shareholders mind-boggling returns. For example, Nvidia (NASDAQ: NVDA), the world's starring artificial quality (AI) spot designer, saw its banal surge 1,600% implicit the past 5 years, and Palantir Technologies, an AI-driven bundle player, precocious much than 800% since its 2020 marketplace debut. And that's conscionable to notation 2 of the standout players. Many others besides generated large gains for investors.

Why specified outstanding performance? Investors piled into these stocks connected optimism astir the aboriginal of AI, a exertion that could articulation others similar energy oregon the net connected the database of "game changers." That's due to the fact that AI offers the imaginable to prevention time, energy, and costs for companies -- and adjacent pb to caller discoveries.

In caller weeks, though, assorted headwinds weighed connected stocks successful this dynamic field. Investors disquieted astir U.S. export controls connected chips to China, the U.S. implementation of tariffs to 3 large commercialized partners, and wide uncertainty astir the economy. All of this has led the Nasdaq to a diminution of much than 7% implicit the past 2 weeks as immoderate of its biggest members tumbled. But earlier you crook your backmost connected the tech sector, clasp on. Here are 3 reasons tech investors shouldn't interest excessively overmuch astir the caller declines successful AI stocks.

As mentioned, 1 large taxable weighing connected the marketplace is President Donald Trump's 25% tariffs connected imports from Mexico and Canada and a 20% tariff connected imports from China. Tech companies nutrient galore of their parts and products extracurricular of the U.S., meaning they could soon look higher prices.

The White House says the tariffs are successful effect to a travel of lethal drugs into the U.S. and noted that the determination was "until the situation is alleviated." We don't yet cognize however agelong the existent commercialized war volition last, but this is an archetypal motion that the tariffs are temporary.

So, yes, the tariffs correspond a situation today, but immoderate of the world's biggest and highly profitable tech players specified arsenic Nvidia oregon Apple should beryllium capable to negociate these times -- and win implicit the agelong term.

As for export controls connected chips to China, these whitethorn not beryllium temporary, but they mightiness beryllium manageable. Implemented successful 2022, they already person reduced Nvidia's income successful that state by fractional compared to pre-control days, but Nvidia inactive delivered worldwide triple-digit maturation to $130 billion, a record, successful the latest fiscal year, showing the occupation hasn't been disastrous for earnings.