AI Stocks Sink as Funding Flows In

Several AI applications can be seen on a smartphone screen, including ChatGPT, Claude, Gemini, Perplexity, Microsoft Copilot, Meta AI, Grok and DeepSeek.

Philip Dulian | Picture Alliance | Getty Images

Money continues to pour into artificial intelligence ventures, yet AI stocks are struggling to maintain momentum, creating a disconnect that has investors on edge.

In a familiar pattern, tech giants are strategically aligning themselves with promising AI startups. Microsoft and Nvidia are poised to inject a combined $15 billion into Anthropic, solidifying their positions in the burgeoning AI landscape. In return, Anthropic will leverage the computing power offered by its new stakeholders. The structure of these deals, where investment flows are intertwined with reciprocal service agreements, is becoming increasingly common in the AI sector.

However, the AI world is not solely defined by investment dynamics; significant advancements are also taking place in model development. Google recently unveiled Gemini 3, the latest iteration of its AI model. Demis Hassabis, CEO of Google’s DeepMind, touts Gemini 3’s ability to provide “genuine insight,” moving beyond formulaic responses. This focus on enhanced reasoning and problem-solving capabilities signals a new phase in AI development, though it remains to be seen how these advancements will translate into tangible user benefits.

Despite the hype and continuous innovation, investor sentiment towards AI stocks appears cautious. Heavyweights such as Nvidia, Amazon, and Microsoft experienced declines, contributing to the S&P 500’s fourth consecutive day of losses – the longest losing streak since August. This downturn highlights the market’s sensitivity to the earnings performance of key AI players and the broader economic outlook.

Nvidia, considered a bellwether for the AI sector, faces heightened scrutiny as it prepares to report earnings. According to CFRA’s chief investment strategist Sam Stovall, Nvidia is “the top company within the top industry within the top sector.” Should Nvidia’s results fail to live up to inflated expectations, the S&P 500’s downward trajectory could intensify, potentially triggering a broader market correction.

S&P 500 extends its losing streak. Major indexes declined, while bitcoin prices briefly dipped below $90,000 before rebounding. Asia-Pacific markets followed suit, with technology stocks leading the decline, reflecting concerns about AI’s profitability and growth prospects.

Anthropic secures funding from Microsoft and Nvidia. Microsoft and Nvidia are investing in Anthropic, valuing the AI startup at around $350 billion. This substantial investment underscores the increasing competition in the AI model development space and Anthropic’s potential to challenge OpenAI’s dominance. The partnership also highlights the symbiotic relationship between AI developers and providers of computing infrastructure.

Google launches Gemini 3. According to Alphabet CEO Sundar Pichai, Gemini 3 requires less user prompting and represents an evolution in AI capabilities. The update comes eight months after the introduction of Gemini 2.5. Google’s strategy involves incremental updates and continued investment in its AI models to maintain a competitive edge. The company’s efforts underscore strategic importance that it places on AI in its future business strategy.

U.S. Senators call for an investigation into crypto firm linked to Trump. World Liberty Finance, a company with ties to the Trump family, faces scrutiny over its transactions involving tokens and alleged connections to illicit entities, suggesting a need for greater regulation of crypto markets.

[PRO] ASML dominates key segment of AI supply chain. Goldman Sachs projects that ASML can more than double its 2030 revenue forecast. This single company is leading in a critical area of the AI supply chain and experts believe it will continue to see gains.