AI Stocks Sink as Rate Hike Fears Dampen Tech Outlook

AI stocks like AMD, C3.ai, Arm, and Micron fell on Tuesday due to concerns that the Fed won't cut interest rates as quickly as hoped.

Higher interest rates mean businesses are less likely to adopt costly new technologies like AI.

Strong economic data on Tuesday, like the ISM manufacturing index, signals inflation isn't fully under control yet.

Valuations of the AI stocks are mixed - Arm, AMD and Micron have low PEG ratios but C3.ai is still unprofitable.

Investing in AI has big upside but also comes with major volatility risks that investors should consider carefully.