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A discount on an asset that you think is way overpriced is still too expensive to buy.

That’s one lesson gleaned in the days since the sell-off, as many investors are still waiting for a diminished Magnificent Seven to lose even more of its shine.

Lower valuations and the feeling that this week presented a rare buying opportunity haven’t softened the skepticism around Big Tech’s pivot to AI. Instead, plummeting prices reinforced the idea among holdouts that keeping your distance is the safer bet.

“Even after this recent market correction, the mega tech names are still trading at hefty valuations, and investor skepticism around huge bets on artificial intelligence continues to grow,” said Nicole Tanenbaum, partner and chief investment strategist at Chequers Financial Management.

“A rotation has been underway and traders have been cautious to ‘buy the dip’ at these still-lofty valuation levels, unconvinced that the sell-off is over,” she said.

While a semblance of stability has returned to Wall Street — investors dug stocks partially out of the hole on Tuesday and Wednesday — Mag Seven players are still licking their wounds. And several of them have been facing pressure well before Monday’s retreat.

Nvidia (NVDA), Amazon (AMZN), and Tesla (TSLA) shed more than 10% over the past week; Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG, GOOGL) are down in the 4% to 6% range; and Meta (META) is the sole winner, up about 4%.

"The trillions of dollars in cash sitting in money markets is one of the surest signs of the skepticism in this market," said James Demmert, chief investment officer at Main Street Research.

But all that money sitting on the sidelines just a few months before the Fed hits the accelerator can be seen as another reason to expect the bull market to continue.

"For investors who felt that the AI tech train had left the station without them, well, it has now backed up and it's waiting for them to get on board," Demmert said.

Observers who see tech's weakness as an attractive entry point view the panic over market concentration and voluminous AI spending as overblown. Buying shares of the most successful companies at lower prices isn't that complicated, especially as their valuations are suddenly more compelling compared to a few weeks ago.

But should investors welcome what bulls proclaim is a "healthy" correction or keep their guard up against irrational exuberance and never-ending techno hype? It's possible to do both at once. But days like Monday make it difficult.

Aside from reassurances that many economists don't see the US falling into a recession, what could give tech stocks momentum again? Earnings for all but one of the Magnificent Seven have come and gone. But Nvidia's report at the end of the month could serve as a crucial catalyst, as it's done before, simultaneously powering the AI trade, fueling criticism of it, and drawing in dollars from the AI faithful and the FOMO crowd.

By then, investors might still be agonizing over getting their timing right. And the mega tech companies are wrestling with their timelines too. The market turmoil didn't squash the broader AI narrative. It's still unraveling, but the dips don't feel the same to everyone.

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on X @hshaban.

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