Nvidia stock dropped the most since late January on Wednesday after its stellar AI-fueled rally.
C3.ai shares also fell after the AI software company posted a disappointing sales outlook.
While many investors remain excited about AI, others think some stocks are looking overpriced.
Shares in Nvidia suffered their biggest one-day fall in four months on Wednesday, just a day after the company touched a $1 trillion valuation for the first time as part of the AI-fueled stock surge.
The chipmaker closed 5.7% lower, on Wednesday, marking the biggest daily drop this year since the end of January, according to Bloomberg estimates. It's now worth $934 billion.
However, Nvidia is still up almost 160% this year, eclipsing the entire S&P 500 and contributed to the index's near-9% boost.
Meanwhile, AI software company C3.ai fell 9% on Wednesday after posting a disappointing sales outlook, according to Bloomberg. Nevertheless, it's risen by almost 260% this year.
While the mania surrounding advancements and capabilities of AI tools has boosted certain stocks, some investors are concerned they're now overpriced.
ARK Invest sold the bulk of its Nvidia stake ahead of the stock's huge rally last week. Cathie Wood, its CEO, said the chipmaker's shares were "priced ahead of the curve" and a market valuation of 25 times its estimated sales for this fiscal year.
Still, the dips are unlikely to dampen broader investor optimism. Wharton professor Jeremy Siegel recently said he doesn't see the mania around AI stocks as a bubble — even if it's impossible to predict when the peak will be reached.
Read the original article on Business Insider