(Bloomberg) -- The rapid rally in tech stocks benefiting from artificial intelligence has stalled as a disappointing outlook from C3.ai Inc. sparked a selloff in AI-exposed stocks.

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AI software firm C3.ai fell more than 18% Thursday, extending Wednesday’s drop of 9% on a disappointing sales outlook, and paring its gain for the year to just under 200%. Nvidia Corp. declined 5.7% Wednesday after surging over 30% in three days, after the chipmaker briefly reached a $1 trillion market cap earlier this week.

“Last night, earnings from C3.AI and Salesforce showed the risk that the recent investor enthusiasm for tech shares poses,” said Ed Yardeni, chief investment strategist at Yardeni Research.

Wall Street has been obsessed with everything AI this year, with Nvidia’s blowout revenue forecast adding fuel to the frenzied rally. But lofty valuations — Cathie Wood says it’s “priced ahead of the curve” — are a reason for caution in the still nascent industry.

“While technology sector stock prices may be due for a short-term breather after their impressive performance this year, we’d continue to expect the sector’s forward earnings to be revised higher over the longer term as widespread AI spending ramps up and as the semiconductor cycle heads up,” Yardeni said.

Read more: Nvidia Touches $1 Trillion Mark After Beating Rivals to AI

Cracks appeared in Asia as well, with three Nvidia suppliers cooling after big gains in May. Taiwan Semiconductor Manufacturing Co. fell for a third straight day, while Tokyo-listed Advantest Corp. and South Korea’s SK Hynix Inc. are little changed over the past two sessions.

According to a Bloomberg Intelligence analysis, generative AI is poised to be a $1.3 trillion market by 2032 as it boosts sales for the tech industry’s hardware, software, services, ads and gaming segments.