AI Whiplash Jolts Stocks as Sentiment Lurches From Fear to Greed Carmen Reinicke Artificial intelligence could wipe us all out. Or it might just kill our unwanted subscriptions. Those are the two extremes the stock market has swung between over the past two weeks, sending hundreds of billions of dollars sloshing out of — and then back into — AI-exposed stocks while fraying the nerves of investors scrambling to keep up."This has been a narrative market and the narrative changes every other week," said Nancy Tengler, chief executive officer at Laffer Tengler Investments. It started on Sept. 12, when Anthropic Chief Executive Officer Dario Amodei called for a slowdown in development of cutting-edge AI models, which was quickly backed by Open AI Chief Executive Officer Sam Altman and Space X Chief Executive Officer Elon Musk. The moves seemed to validate a series of recent warnings from within the industry about existential risks posed by the technology. The response in the stock market was swift. On the first trading day after Amodei’s essay was published, AI infrastructure stocks tumbled, as investors worried that hitting the brakes on development would mean less spending on computing equipment. The tech-heavy Nasdaq 100 Index dropped 1.5% between Sept. 14 and 15, erasing more than $600 billion in market value as stocks like Core Weave Inc. and Lam Research Corp. fell more than 9%.

But those fears vanished last week as excitement about the popularity of Meta Platforms Inc.’s Muse personal assistant sent traders rushing back into AI exposed stocks. Meta shares jumped 11% on Monday, putting the Facebook and Instagram parent on pace for its best month in more than a decade after struggling for much of the year amid concerns that heavy spending on AI wouldn’t pay off. Arm Holdings Plc jumped 17% on Monday while Intel Corp. and Advanced Micro Devices Inc. each rallied more than 9%. The Philadelphia Stock Exchange Semiconductor Index, known by its ticker SOX, gained 6% on Monday and Tuesday, helping to push the Nasdaq 100 to its first record since early June. It also triggered selloffs in the shares of companies that rely on recurring bills and negotiable pricing as AI agents are expected to improve at tasks like price comparison, trip bookings and customer service interactions. Insurer Allstate Corp. fell 8.9% this week while cable-provider Charter Communications Inc. sank 12% and Planet Fitness Inc. shed 14%.

Still, by the end of the week, $3 trillion had been added to the Nasdaq 100 since the Sept. 15 low."The moves are staggering in both directions," said Rhys Williams, chief strategist at Wayve Capital Management. "It’s hard to explain from a fundamental point of view."Of course, rapid changes in sentiment are nothing new in this market, which has been propelled higher by AI for nearly four years. In early 2025, fears about a pullback in spending sparked by a Deep Seek AI model, developed on the cheap in China, caused semiconductor stocks to plunge. Nvidia Corp., which dominates the market for AI chips, dropped 17% in a single day. While those fears proved to be misplaced, AI has only gotten more important for the market and the economy with spending from tech giants and AI startups ballooning. And that’s giving investors itchy trigger fingers, especially when it comes to AI disruption. The Muse-driven selloff had echoes of earlier this year when releases of AI tools from Anthropic sent shares in a broad range of industries tumbling, from software-as-a-service companies to asset managers. But when it comes to AI spending, investors are grappling with other risks in addition to safety. Interest rates are soaring, making the cost of AI development more expensive. And there’s a rising backlash against data centers. Fears about that flow of money slowing down have been most apparent in semiconductor stocks. After doubling from the start of the year through June 22, the SOX tumbled 29% to a July 29 low. While the index has staged a rebo...