The artificial intelligence trade that has driven markets to record highs in 2025 is experiencing its most serious wobble yet. Broadcom just posted its worst three-day decline since 2020, while Oracle has extended its multi-session selloff to approximately 17%. The question on every investor's mind: is this a healthy correction or the beginning of something worse?

The Damage So Far

Monday's session saw AI-linked stocks lead the market lower:

  • Broadcom: Down more than 5% Monday, extending a three-day plunge that ranks as the stock's worst since the pandemic crash of 2020
  • Oracle: Fell another 2%+ Monday, bringing its total decline to roughly 17% over multiple sessions
  • ServiceNow: Plunged over 10% on acquisition news and a KeyBanc downgrade

The selling pressure hit the broader market, with the Nasdaq Composite falling 0.59% to 23,057.41. Even the S&P 500, with its more diversified composition, slipped 0.16%.

What's Driving the Selloff

Oracle's Data Center Delays: A Bloomberg report that Oracle has pushed back deadlines for some of its data centers for OpenAI due to labor and material shortages sent the stock plunging about 6% on the news alone. When the company building AI infrastructure admits it can't build fast enough, investors take notice.

Valuation Concerns: BTIG analyst Jonathan Krinsky noted that the AI trade is starting to look "toppy," observing that "from a medium-term perspective the AI Basket has put in a 'lower low' and 'lower high' over the last few months"—a classic precursor to a topping process.

Rotation to Value: Money isn't leaving equities entirely; it's rotating. The Dow Jones Industrial Average, with its old-economy tilt, hit an intraday all-time high on Monday even as tech names cratered. Bank of America, Walmart, and other value names traded at record highs.

The Bull Case: This Is Normal

AI optimists argue this is exactly what healthy markets do. After a massive run, profit-taking is natural. The underlying thesis—that AI will transform every industry and drive corporate profits for years—remains intact. Nvidia, notably, gained 1.5% on Monday, suggesting the highest-quality AI plays are holding up.

The selloff may also reflect position-squaring ahead of year-end rather than fundamental concerns. Fund managers locking in gains before the calendar turns doesn't mean they've given up on AI.

The Bear Case: The Music Is Stopping

Skeptics point to several warning signs:

  • Execution problems: Oracle's data center delays suggest the AI buildout is harder than expected
  • Margin pressure: Broadcom's recent earnings showed strong revenue but margin compression
  • Crowded trade: When everyone owns the same stocks, there's no one left to buy
  • Historical pattern: Every major tech theme—from dot-com to crypto—has experienced painful corrections

What History Suggests

The last time we saw this kind of concentrated selling in AI names was July 2025, when a Bank of Japan rate signal triggered a 31% decline in risk assets. That selloff proved to be a buying opportunity—but only for investors with the stomach to buy into the fear.

How to Position

For investors navigating the AI selloff:

  • Don't panic sell: Selling after a 17% decline locks in losses at potentially the worst time
  • Quality matters: Companies with actual AI revenue (not just AI promises) will hold up better
  • Diversification works: The Dow's strength shows why not everything should be in tech
  • Watch the leaders: If Nvidia breaks down, the correction likely has further to run

The Bottom Line

The AI selloff is a reminder that even the strongest trends experience gut-checks. Whether this is a buying opportunity or the start of a larger correction will only be clear in hindsight. For now, the prudent approach is to avoid both panic and complacency—and remember that the best long-term investments often feel worst at exactly the wrong moment.