AI Rally Peaks, DRAM ETF Plunges 36% as Damodaran Warns Smaller Startups at Greater Risk

According to Business Insider, semiconductor and memory ETFs fell sharply in July as investors rotated away from AI-related stocks. The Roundhill DRAM ETF (DRAM-US) plunged 36% from recent highs, while the iShares Semiconductor ETF (SOXX-US) declined 22%.

Aswath Damodaran, a finance professor at New York University's Stern School of Business, warned that the AI boom peaked months ago. He cautioned that while large-cap tech giants possess strong cash flows and debt capacity, smaller AI companies lack sufficient financial buffers and face greater pressure during market corrections. "Unless large AI companies begin delivering profits that match their billions in capital spending, they will become very different enterprises," Damodaran stated.