Multibillion-dollar deals continue to be announced to add data center compute power for artificial intelligence (AI) applications. Yet some investors are skeptical that a bubble may be forming with AI stocks.
One name that is caught up in the bubble talk is Iren (IREN +12.66%). Iren shares plunged as much as 14% at the low for the week. A recovery on Thursday and Friday helped pare that drop. As of Friday morning, Iren stock was actually up by about 2% for the week, according to data provided by S&P Global Market Intelligence.
Image source: Getty Images.
AI bubble or no AI bubble?
A strong 10% rebound on Friday helped wipe out much of the week's losses for Iren stock. The roller-coaster ride came as investors began to feel that some AI infrastructure stocks rose too far, too fast. That led to what many felt was a deflating bubble. Once that sentiment hits Wall Street, many investors want to sell quickly to get ahead of a stock market bubble bursting.
Two things changed that thinking. A strong earnings report from tech giant Intel on Thursday gave investors confidence that the market for semiconductor chips was still hot. And a softer-than-expected inflation report on Friday meant there was a better chance that the Federal Reserve would continue on an interest rate-cut cycle.
NASDAQ: IREN
Key Data Points
Lower borrowing costs will help the booming data center buildout continue. That's good news for Iren, as it will gain customers to utilize its AI infrastructure.
