Financial markets in the United States and Asia experienced significant declines as investors offloaded shares in technology companies, with a notable impact on artificial intelligence (AI) stocks.
On Wednesday’s trading session in New York, the S&P 500 dropped 2.3% and the Nasdaq, heavily weighted with tech stocks, fell 3.6%, marking their largest single-day declines since 2022. The Dow Jones Industrial Average also retreated by 1.2%.
Leading the downturn were major firms such as Nvidia, Alphabet, Microsoft, Apple, and Tesla.
In Asia on Thursday, Japan’s Nikkei index led the decline, plunging more than 3%.
Throughout much of the year, the stock market’s gains have been propelled by technology companies, particularly those involved in AI.
Nvidia, a prominent player in AI chips, saw its shares tumble 6.8%, reflecting a 15% decrease in value over the past fortnight. The company is scheduled to announce its financial results by the end of August.
Tesla, the electric car manufacturer led by billionaire Elon Musk, saw its shares drop by over 12% following disappointing financial results.
Alphabet, the parent company of Google and YouTube, experienced a 5% decline in its stock price despite surpassing analyst expectations in its recent financial report. The company indicated that its spending would remain high for the remainder of 2024 as it continues to invest heavily in AI technology, a trend mirrored by its competitors.
In Asia, semiconductor manufacturers Renesas Electronics and Tokyo Electron in Japan, along with South Korea’s SK Hynix, were among the notable decliners.
Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, commented, “Investors are increasingly concerned about the significant expenditures on AI without corresponding revenue benefits. This may prompt a shift towards a more discerning approach focused on returns rather than indiscriminate sector-wide investments.”
Investor caution has also been amplified by recent surprises in the US presidential election campaign and uncertainty surrounding the timing of interest rate adjustments by the US Federal Reserve.
Related topics:
