The market has a short memory. It’s a place where powerful narratives, particularly those tied to transformative technologies like artificial intelligence and next-generation energy, can generate their own gravitational pull. For much of this year, a trio of stocks—IREN Limited (IREN), Nebius Group N.V. (NBIS), and Oklo Inc. (OKLO)—were the center of that universe. Riding the tailwinds of crypto mining, data infrastructure, and advanced nuclear power, these names posted staggering year-to-date gains, soaring between 300% and 400%.
For a moment, it looked like a new class of leaders had emerged, a vanguard for the next phase of the tech revolution. But gravity, especially the financial kind, always reasserts itself.
In recent weeks, these high-flyers have experienced a rapid, punishing descent. Corrections of 20–30% have erased weeks of gains in a matter of days. The narrative hasn’t changed—AI’s demand for energy is still insatiable, and the need for efficient data centers remains critical. What has changed is the market’s tolerance for risk and its renewed focus on a rather inconvenient variable: profitability. The story was compelling, but the numbers are starting to tell a different tale.
The Narrative-Fundamental Disconnect
When momentum is the primary driver of an asset’s price, fundamentals are often treated as a secondary concern. That model works, until it doesn’t. The recent performance of IREN and NBIS is a textbook case of this dynamic. As the technical picture weakened, investors suddenly started paying attention to the earnings estimates that had been deteriorating for weeks.
Over the past 60 days, the data has been unambiguous. Both IREN and NBIS have seen significant downward earnings revisions, pushing their Zacks Ranks to a #4 (Sell). For IREN, a company involved in crypto mining and data centers, current year earnings estimates have been slashed by nearly 40%. NBIS saw its projections for the next quarter collapse by a staggering 88%. These aren't minor adjustments; they represent a material reassessment of their near-term earning power.
Then there is Oklo (OKLO). The company stands as an outlier, a pure-play on a powerful idea: that compact, small modular reactors (SMRs) will power the world’s data centers. The stock’s ascent was meteoric, reaching a valuation of $20 billion. The problem? Oklo is pre-revenue. It has no operating licenses. It has no binding power contracts. Its first commercial reactor isn't expected to come online until 2027 at the earliest.
And this is the part of the analysis that I find genuinely puzzling. A $20 billion market capitalization for a company with zero revenue is not just aggressive; it borders on the abstract. It’s a valuation predicated entirely on a story, a multi-year projection of future success discounted back to the present with what appears to be an extremely forgiving discount rate. The recent Financial Times report questioning this "frothy valuation" wasn't revealing a secret; it was simply stating the obvious. At what point does a "visionary" valuation become a mathematical absurdity? How are investors modeling cash flows for a company that won’t have any for years, in a sector with immense regulatory and execution risk?
This disconnect is the core of the issue. These stocks are like rockets that achieved escape velocity from their fundamental launchpad, propelled by the sheer force of the AI narrative. But the first-stage booster—speculative momentum—has burned out. Now, we’re watching them fall back toward a reality dictated by balance sheets and income statements.
Reading the Technical Tea Leaves
The charts are simply a visual representation of this shift in sentiment. For IREN, NBIS, and OKLO, the picture is technically weak. All three have broken below key support levels and are retesting their most recent breakout zones. What was once a floor of enthusiastic buying has now become a potential ceiling of overhead supply from investors who bought near the top. To step in and buy aggressively here would be the classic definition of trying to catch a falling knife.
There is, of course, a bull case for a recovery. One could look at a name like AppLovin (APP), which, after a 50% decline in mid-2025, entered a multi-month consolidation period. That long, sideways churn eventually built a solid base from which the next major advance could be launched. It’s a plausible path forward for these stocks as well. A period of digestion, where the speculative froth is wrung out and a more stable base of long-term holders is established, could set the stage for a more sustainable rally.
But that process takes time. It’s rarely a V-shaped recovery. The timing of such a bottom is impossible to predict, but it seems improbable that these stocks will resume their upward trajectory without a prolonged period of basing. The market needs to see evidence that the selling pressure has been exhausted and that the earnings picture has stabilized or, ideally, started to improve.
The selling by sophisticated players is also a data point worth considering. Cathie Wood's ARK fund, a well-known investor in disruptive technology, sold over 50,000 shares of Oklo earlier this week. While not a massive position, it’s a signal of profit-taking and perhaps a recognition that the valuation had become untethered from a reasonable projection of future value. The run-up was about 450% this year—to be more exact, some sources cited closer to 480% at its peak. A pullback was not only likely, but necessary.
For now, the data suggests that the path of least resistance is either lower or sideways. The narrative remains intact, but the market is demanding proof. Until these companies can provide it in the form of stable charts and, more importantly, improving fundamentals, any rallies are likely to be met with selling.
The Gravity of Numbers
Let's be clear. The sell-off in these stocks is not an indictment of their long-term potential or the validity of the themes they represent. The demand for energy to power AI is real and growing exponentially. The need for innovative energy solutions like SMRs is undeniable. The problem was never the story; it was the price. The market, in its infinite and often painful wisdom, is now correcting that discrepancy. This isn't a dip to be bought blindly. It is a necessary and healthy reversion to the mean, a reminder that even the most compelling narratives are ultimately tethered to the unyielding gravity of numbers. Patience isn't just a virtue here; it's a requirement for survival.