Shares of AI-related stocks fell significantly ahead of Nvidia’s highly-anticipated quarterly report, which is due after the closing bell on Wednesday. Nvidia, a prominent player in the AI hardware market, saw its shares dip by 1.2% amid concerns around demand for its AI chips. Other semiconductor stocks also experienced declines, contributing to a broader downturn in the sector.
The Philadelphia Semiconductor Index reflected these losses, while AI server manufacturers like Super Micro Computer saw a significant drop of 8% and Dell shares also slid. Earlier in the month, Super Micro Computer had announced it would file its delayed annual report by February 25, adding to the market’s uncertainty. Globally, AI-linked stocks have been under pressure for a second consecutive day following an analyst note released last week.
The note suggested a potential slowdown in data center leasing by Microsoft, adding to the sector’s woes. Data center operator Digital Realty shares slipped 1.2% on this news. Power companies, which are anticipated to see increased demand due to the energy-intensive nature of data centers needed for AI development, also slumped.
Vistra shed 5.5%, and Constellation Energy saw similar declines. Analysts and investors will be closely monitoring Nvidia’s report for further indications of market trends and demand within the AI sector. High-flying AI stocks tumbled on Friday amid a broad risk-averse pivot on Wall Street.
Utilities Constellation Energy Corp. and Vistra each closed about 8% lower, while nuclear energy technology company Oklo slid 9%. Oklo, which is backed by OpenAI CEO Sam Altman, lost nearly 30% of its value this week.
Nuclear energy stocks have soared in the past year amid booming demand for electricity to fuel power-hungry artificial intelligence models. Constellation and Vistra were two of the S&P 500’s best-performing stocks last year. Even with today’s big losses, they are up more than 200% and 100%, respectively, over the past 12 months.
Major cloud providers such as Microsoft, Alphabet, and Amazon have invested in nuclear power as a reliable, low-carbon source of energy. Microsoft last year funded projects to restart a dormant reactor at Pennsylvania’s Three Mile Island and develop small modular reactors. The AI craze propelling nuclear stocks higher hit a speed bump late last month when the release of a surprisingly efficient AI model from a Chinese start-up raised doubts about the need for American tech companies to spend hundreds of billions on Nvidia chips, Super Micro Computer servers, and the nuclear plants to power them.
Many on Wall Street have since shaken off those concerns, but the AI rally has struggled to regain its momentum. Several other AI “picks and shovels” stocks fell sharply on Friday, including data center operator Vertiv Holdings, down 8%, and Super Micro Computer, down 5%. Nvidia stock fell 4%.
The sell-off even extended to marketing software maker HubSpot, shares of which have risen more than 600% in the last year, which dropped nearly 8% Friday. Another AI software company, C3.ai, was down more than 4%. The sell-off reflects growing market concerns about the overheated valuations of AI-related stocks and the sustainability of their recent gains.
The AI sector has faced significant headwinds recently, with stocks across the board experiencing declines.
AI stocks fall amid sector woes
The downturn intensified after several companies started canceling their data center leases, causing increased scrutiny on AI stocks.
Wall Street has responded with skepticism, as evidenced by a nearly 30% drop in some AI stocks over the past five days, and the Nasdaq Index falling below 19,000 points. Market correction may loom if the earnings do not beat analyst expectations dramatically. However, not all AI stocks are in freefall.
Some have already priced in bearish sentiments and now offer solid upside potential with limited downside risk. Here are three AI stocks worth considering:
EPAM Systems provides software engineering services and cloud/AI products to its clients. While software engineering drives most of its revenue, the company is increasingly integrating AI and automation into its offerings.
The stock took a significant hit in late 2021 but was on an upward trajectory at the start of 2025 until it disclosed disappointing financial guidance, causing it to dip over 20%. For Q1 2025, the company guided for adjusted EPS of $2.22 to $2.32, below the consensus of $2.59. The full-year adjusted EPS guidance of $10.45-$10.75 also missed the expected $11.32.
Despite these setbacks, EPAM remains a profitable growth stock trading at less than 20 times forward earnings. Having grown its revenue over 20% annually over the past three years, it is expected to continue its double-digit growth this year. The consensus price target of $268.4 indicates a potential 26% upside.
UiPath is a robotic process automation (RPA) software company that has also faced significant stock declines, down over 47% in the past year. In May 2024, the unexpected CEO transition saw co-founder Daniel Dines return, which coincided with a downward revision in full-year revenue guidance from $1.56 billion to $1.41 billion. However, Q2 2025 results showed some improvement, with a 19% growth in Annual Recurring Revenue (ARR).
Despite raising its revenue guidance for FY2025 to $1.42 billion-$1.43 billion, analyst skepticism about the company’s execution under new leadership persists. Nonetheless, with the AI and robotics industry just starting to gain traction, high R&D expenditures could fuel a resurgence. UiPath remains profitable and trades at 28 times forward earnings, with projected double-digit revenue growth.
The consensus price target of $17.44 suggests a 39% upside. Intel has faced significant disappointment in the semiconductor sector, struggling to catch up in AI chip development. Both revenue and profits have been declining, and consequently, the stock has suffered.
However, the company’s individual segments remain valuable. There is growing support among shareholders for splitting the business to unlock this value. Intel is reportedly considering bids for its CPU/GPU design teams to position itself as a direct competitor to Nvidia in the AI space.
The company is also contemplating bids for its international fabrication plants. Although these moves are still speculative, they present potential for significant gains if they materialize. The stock’s current low price offers relatively low downside risk, making it a speculative but potentially rewarding investment.
The consensus price target of $26.88 implies a 15.1% upside.
Image Credits: Photo by Artem Podrez on Pexels
Cameron is a highly regarded contributor in the rapidly evolving fields of artificial intelligence (AI) and machine learning. His articles delve into the theoretical underpinnings of AI, the practical applications of machine learning across industries, ethical considerations of autonomous systems, and the societal impacts of these disruptive technologies.
