The financial markets in the US and Asia experienced a sharp decline as investors rushed to sell off shares in technology companies, particularly those involved in artificial intelligence (AI). On Wednesday, the S&P 500 dropped by 2.3%, the Nasdaq fell by 3.6%, and the Dow Jones Industrial Average decreased by 1.2%, marking their biggest one-day falls since 2022.
Major tech firms such as Nvidia, Alphabet, Microsoft, Apple, and Tesla were among the companies driving the losses. In Asia, Japan’s Nikkei index led the declines on Thursday, falling by 2.8%.
Shares in AI-related technology companies have been driving much of this year’s stock market gains. Nvidia, a leading AI chip giant, saw its shares plummet by 6.8%, losing about 15% of its value in the last two weeks. The company is set to report its financial results at the end of August.
Tesla, the electric car maker owned by multi-billionaire Elon Musk, also experienced a significant drop of more than 12% after disappointing financial results. Alphabet, the parent company of Google and YouTube, saw its stock price decrease by 5% despite beating analyst expectations in its recent financial report. The company announced that its spending on AI technology would remain high for the rest of 2024.
Investors are growing more concerned about the significant expenditure on AI technology by companies without seeing substantial revenue benefits. Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, stated, “Investors will focus more on returns in this space than just buying the whole sector.”
The uncertainty surrounding the US presidential election campaign and the timing of an interest rate cut by the US central bank have also contributed to investors’ wariness in the market. Despite the recent setbacks, experts believe that this may not mark the start of disbelief in AI but rather a shift towards a more cautious approach in investing in the sector.
