By Blake Anderson, CFA®, Associate Portfolio Manager
Shares of major technology companies have fallen into correction territory in recent weeks. There are a few potential drivers of this drawdown, but it’s also worth it to reiterate that technology investments are inherently volatile. Investors operate under the guise of imperfect information that can often be spun multiple ways, but seeing the big picture may help investors separate signal from noise.
A Painful Few Weeks
Five of the eight ‘Elite 8’ stocks are in a drawdown of at least 10% from their close-of-day 52-week high prices, as shown below. Broadcom has suffered both the most severe drawdown (closing 21.1% below its 52-week high price as of 12/17/2025) and the swiftest, declining this far in just seven days. On average, the ‘Elite 8’ group of stocks are 12% off their highest prices of the year, weighing on tech investors’ portfolios and the broader indices.
Other technology highfliers tied to the AI-buildout include Oracle and CoreWeave, which are both in deep bear market territory themselves. These AI highfliers have declined 46% and 65%, respectively, from their 52-week highs. There are certainly jitters in the technology trade.
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Flying Too Close to the Sun?
To me, one of the main concerns that has weighed on these stocks is their connection to OpenAI and that company’s perceived (in)ability to continue its growth in spending. Throughout 2024 and 2025, OpenAI, armed with fresh capital and rapidly growing revenue, was viewed as essentially having a blank check to spend on training internal AI models. Many investors aimed to find suppliers for OpenAI’s growth and latch on to their potential rapid revenue growth.
However, perceptions have changed. Some fears include that OpenAI’s estimated $1.4 trillion in projected spending1 is too ambitious, and that the emergence of Alphabet’s Gemini AI offering could potentially win market share, users, and future revenue from OpenAI and further pressure OpenAI’s spending capacity. So, if OpenAI is now suddenly reigning in spending plans instead of rapidly growing, investors may be abandoning companies who may have benefited from spending growth.
Lower Growth or Later Growth?
But there may be further advancements from OpenAI to come. The company has been slow to release new models since the spring, but it also forces me to ask ‘why have they been slow?’ It could be that we’ve reached computing limits with current GPUs (and that the coming launch of Nvidia’s Blackwells could accelerate innovation), it could be that the time to complete data center construction has lengthened (and therefore dented how much computing power OpenAI has access to), or it could be that the company has switched its internal focus from LLMs to develop other AI-based applications (and therefore ‘slowing user growth’ at ChatGPT may not be the most informative growth metric). Likely, all of these play a role in OpenAI’s perceived recent slowness.
And their perceived slowness can lead to pretty bearish headlines and thought processes in the short term. Skeptical investors could tell a tale that ‘OpenAI’s slowing user growth is crunching their spending ability, forcing data center operators to slow construction or risk default, which further shrinks OpenAI’s potential computing power and will forever put them behind Alphabet’s spending capabilities.’ That could be a serious growth de-rating to many companies involved in the buildout of AI-infrastructure if it turns out to be accurate.
But the opposite could be true as well if we invert some key facts. Optimistic investors could tell a tale that ‘Data centers are increasingly complex to build, and delivery timelines have lengthened, which has reduced OpenAI’s computing capacity. This reduction in computing power, while perhaps temporary, has delayed the rollout of more powerful applications that could rapidly grow revenue if successful. So, accelerating data center buildouts may actually be an answer, and those able to complete the buildout of more advanced data centers may actually have a unique asset.’ Optimistic investor may simply see recent slowness as ‘later growth,’ and not necessarily ‘lower growth.’ While the answer is unknowable, investors have been selling first and asking questions later as evidenced by recent drawdowns.
In short, technology investors have had a rough couple of months. The average ‘Elite 8’ stock is in correction territory, defined as more than 10% off its 52-week high closing price. And other ‘AI darlings’ are in outright bear markets as investors fear they may have flown too close to the sun in tying themselves to OpenAI. A driving force of this drawdown has been a change in perception about the spending capability of OpenAI. Between data center delays and a perceived lack of innovation, the company at the center of the AI boom has cooled and dragged down stocks tied to its growth with it. Only time will tell if this tech tumble is temporary.
For more content by Blake Anderson, CFA®, Associate Portfolio Manager click here.
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