The AI Investing Pulse

August 21, 2025

In this Week’s Edition:

1. Analysis - AI stocks stumble but select leaders bounce back

2. Stock Ideas - 3 stocks to watch when the pullback comes

3. News - How Vertiv is cashing in on AI's power crisis

4. Startups - Ex-Twitter CEO Parag Agarwal returns with AI startup

5. Trends - Agentic AI and the future of energy

6. Other News - Markets spooked as MIT finds 95pc of business see no gen AI ROI

AI Stocks Stumble but Select Leaders Bounce Back

US technology stocks have pulled back over the past two sessions, with investors questioning the sustainability of the AI-driven rally that dominated much of this year. The correction follows months of strong earnings and optimism around artificial intelligence that had pushed sector valuations to elevated levels.

The Nasdaq Composite is down roughly 3%, Nvidia fell 7% and Palantir slumped 19% from their high on Monday, and Amazon, Tesla, and Alphabet also retreated. Chipmakers such as AMD, Broadcom, and Micron weakened too — signalling a broad cooling in sentiment.

🤔 Reasons for the Scepticism

Scepticism is growing over the real-world value of AI. An MIT study found 95% of companies have yet to see returns on their AI investments, while OpenAI’s Sam Altman warned we may be in an “AI bubble.” At the same time, the tech sector’s P/E ratio has risen to ~30x earnings, the highest in a year, echoing valuations last seen during the dot-com era.

💵 Broader Pressures

This correction is not solely about AI. Investors are also reducing risk due to seasonal and macroeconomic pressures. Historically, August and September rank as the weakest months for equities, with a 35-year track record of underperformance. Caution has also increased ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole, where any lack of clarity on interest rate cuts could fuel further volatility.

Given their premium valuations, tech stocks remain particularly sensitive to shifts in rate expectations, making them more vulnerable to profit-taking in uncertain conditions.

🌐 Remaining Optimism

Despite the downturn, some analysts see this as a natural correction rather than the end of the AI trade. Wedbush’s Dan Ives remains optimistic, forecasting that the “AI revolution” is only just beginning and that the sector could rally for another 2–3 years as companies pour trillions into AI infrastructure. At present, AI’s most visible use cases remain in chatbots and search, but broader applications are expected to emerge.

📊 Stocks we are Watching

Even amid the pullback, a handful of names showed technical resilience yesterday (20/08), bouncing off their 50-day moving averages (MA50). Palantir $PLTR ( ▼ 1.1% ) , Oracle $ORCL ( ▲ 0.19% ) , Credo Technology $CRDO ( ▼ 0.29% ) , Broadcom $AVGO ( ▼ 1.27% )  

These stocks have attractive AIIP Fundamental and Momentum Scores and therefore will be watched closely to see if they can maintain momentum and extend higher from this level.

🔮 Final Take

The AI sector remains under pressure, with stretched valuations and investors demanding clearer evidence of real-world returns, even as long-term investment in AI infrastructure continues to build. Attention now turns to companies showing relative strength and bouncing off key technical levels, which may offer clues on where market leadership emerges next.

_{Disclaimer - This content is provided for informational purposes only and does not constitute investment advice, personal recommendations, or an invitation to engage in any investment activity. The information presented is derived from publicly available sources and should not be solely relied upon for making investment decisions. Always consult with a qualified financial professional before making investment choices. Past performance is not a guide to future performance.}

_{Methodology & Scores - All scores are proprietary and calculated using data from Finbox (powered by S&P Global Intelligence). Total Score combines metrics for Sales and EPS Growth, Financial Quality, and Valuation, to assess overall business strength (out of 100). Relative Strength (RS) Score measures a stock’s price performance relative to the AI universe (173 AI-focused public companies). Ranking Status is assigned based on score combinations: Fundamental: Total Score ≥ 70, RS < 80. Momentum: RS ≥ 80, Total Score < 70. Watchlist: Total Score ≥ 70 and RS ≥ 80.}

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TOP AI STOCKS PERFORMANCE

TOP AI ETFs PERFORMANCE

AI STOCKS IDEAS

3 stocks to watch when the pullback comes📽️ – Marketbeat

This quantum computing stock just made an AI break – The Motley Fool

AI STOCKS & ETFs NEWS

How Vertiv is cashing in on AI's power crisis – Barchart
Vertiv provides essential thermal and power management solutions for the AI infrastructure challenge, addressing issues of power consumption and cooling in data centres to support AI server demands and enhance operational efficiency.

AI stocks driving the future – Live Trading News
AI stocks are becoming pivotal in investment and technology, emphasizing profitable, sustainable growth in AI-native companies over speculative ventures. Key sectors include chipmakers, software firms, and cybersecurity supporting AI infrastructure.

Morgan Stanley 920 billion S&P 500 savings AI agentic robots jobs – Fortune
Morgan Stanley estimates full AI adoption could save U.S. corporations approximately $920 billion annually, enhancing market value by $13 trillion to $16 trillion.

Sam Altman warns of AI hype bubble – Storyboard18
Sam Altman cautions about overhyped AI investments and inflated valuations reminiscent of past tech bubbles, urging caution among entrepreneurs and investors while acknowledging AI's transformative potential.

AI STARTUPS

Ex-Twitter CEO Parag Agarwal returns with AI startup – Times of India
Parag Agrawal's AI startup, Parallel Web Systems Inc., claims 10% better accuracy than GPT-5, with its Deep Research API autonomously conducting extensive internet research. The startup raised Rs. 260 crore from top investors.

AI TRENDS

Agentic AI and the future of energy – EPAM
Agentic AI is revolutionizing the energy sector by transitioning from automation to autonomous systems, enhancing decision-making and operational efficiency, thereby promoting sustainability and reliability in energy management.

Transformation won't be digital, it will be agentic – CRN
Scott Chasin, CEO of Pax8, discussed the agentic AI revolution, emphasizing a shift to human-machine collaboration that will redefine work, business models, and technology providers through AI agents operating autonomously within ecosystems.

The AI security crisis no one is preparing for – Help Net Security
Organizations are unprepared for a security crisis as AI agents outnumber human users. These agents often lack adequate security controls, creating vulnerabilities for unauthorized access and misuse.

OTHER

Markets spooked as MIT report finds 95% of business see no gen AI ROI – Silicon Republic
A report from MIT indicates that 95% of businesses see no significant return on investment from generative AI despite substantial spending, highlighting challenges in scaling AI applications and a lack of genuine transformation in most industries.

_{Disclaimer - The information contained on this newsletter does not constitute investment advice or a personal recommendation, nor is it an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investments, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all. The information presented is based on publicly available data and sources believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Market conditions can change rapidly, and the information provided may no longer be up to date. This content is for informational purposes only and should not be construed as financial, legal, or tax advice. Data sources: S&P Global Market Intelligence}