BS EDIT: AI meets reality

By Business StandardPublished On Jul 31, 2026

The rally cools

AI stocks have driven markets for two years. Recent selloffs suggest investors are booking profits and taking a more measured view of future growth

Valuations under scrutiny

AI's long-term potential is undisputed, but many leading firms are still burning cash, prompting investors to question lofty market valuations

The profit challenge

Chipmakers are profitable today, but their fortunes depend on sustained AI spending. Slower demand could weigh on future earnings

New risks emerge

Cheaper chip technology, rising AI costs and growing scrutiny of data centres are adding fresh uncertainty to the sector's outlook

Markets seek balance

Investors are closely tracking earnings to assess whether AI investments can translate into durable profits rather than prolonged capital spending

A healthier reset

The correction need not signal AI's decline. It reflects a shift from exuberance to disciplined investing, with capital seeking stronger long-term value