AI went from existential menace to helpful subscription killer in record time, and the market followed the plot twists with vertigo. Nancy Tengler, who leads Laffer Tengler Investments as chief executive officer, said, "This has been a narrative market and the narrative changes every other week."
The latest swing kicked off Sept. 12 when Anthropic's Dario Amodei urged tapping the brakes on cutting-edge AI development, a stance that quickly drew support from OpenAI's Sam Altman and SpaceX's Elon Musk. That lined up with a drumbeat of recent industry alarms about AI's potential to pose existential risks.
Traders reacted the next trading day by offloading AI infrastructure names on the view that any slowdown could mean less spending on compute. Between Sept. 14 and Sept. 15, the Nasdaq 100 Index dropped 1.5%, erasing over $600 billion of market capitalization. CoreWeave Inc. and Lam Research Corp. each dropped more than 9% during the slide.
Then sentiment reversed. Growing buzz around Muse, the personal assistant from Meta Platforms Inc., drew investors back into anything tied to AI. On Monday, Meta rose 11%, setting the Facebook and Instagram parent up for its strongest month in more than ten years after a choppy stretch marked by doubts that its AI spending/) would pay off.
The rally fanned out. Arm Holdings Plc leapt 17% Monday, while Intel Corp. and Advanced Micro Devices Inc. were each up by more than 9%. Over Monday and Tuesday, the Philadelphia Stock Exchange Semiconductor Index (SOX) advanced 6%, a move that helped the Nasdaq 100 register its first new record since early June.
Not every corner benefited. Investors bailed on companies dependent on recurring fees and price haggling as AI agents get better at price checks, travel booking, and customer service tasks. This week, Allstate Corp. fell 8.9%, Charter Communications Inc. slid 12%, and Planet Fitness Inc. dropped 14%.
By week's end, the Nasdaq 100 had added $3 trillion from the Sept. 15 trough. At Wayve Capital Management, chief strategist Rhys Williams remarked, "The moves are staggering in both directions." He added, "It's hard to explain from a fundamental point of view."
Whiplash is not new. AI has powered markets for nearly four years, but the speed of sentiment change keeps accelerating. Early in 2025, worries that a low-cost DeepSeek model from China would crimp spending hammered chip stocks; Nvidia Corp. fell 17% in a single session. Those fears faded, but AI's role in both the market and the broader economy has only grown, keeping investors skittish about disruption stories.
Add other pressure points to the mix. Higher interest rates are pushing up the cost of AI development, and opposition to data centers is rising. Anxiety about a slowdown in AI outlays has shown up most clearly in semis. From the beginning of the year up to June 22, the SOX had doubled, before dropping 29% to a low on July 29. While it has bounced, the index remains 13% below its June peak.
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This isn't the first time new AI tools sideswiped unrelated industries either. Earlier this year, releases from Anthropic helped send shares across sectors lower, from software-as-a-service to asset managers, highlighting how pervasive AI headlines have become for pricing across the market.
Some see opportunity in the rubble. Advisors Capital Management portfolio manager JoAnne Feeney said the selloff eased frothy pricing and left some companies trading at more reasonable valuations. "You don't have to believe that this pace of growth is going to continue for five years in order to own companies like Nvidia or Broadcom and some of the others, because their valuations have really come in," said Feeney, whose firm owns both.
Recently, Nvidia traded at under 17 times expected next-12-month earnings - the lowest valuation it has seen in over ten years.
Others remain cautious.
Skepticism itself is a healthy sign, according to Tengler. "What you don't want is euphoria, which is what we had at the end of the nineties," she said. And the pendulum likely keeps swinging. "That's going to be our reality in the markets for a while."
AI spending from tech giants and startups keeps climbing, which is why headlines around safety, disruption, or cost can move entire indexes in a heartbeat. The next checkpoint arrives Wednesday after the close when Micron Technology Inc. reports earnings, a fresh read on demand for memory chips and, by extension, the AI buildout.
For regular investors, the takeaway is simple enough: the same story that juices chip stocks one week can slam them the next. Narratives are doing a lot of the work right now, so expect more sharp turns as the market toggles between fear and promise.
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