Financial markets across the US and Asia have experienced significant declines on Wednesday, with technology stocks, particularly those related to artificial intelligence (AI), taking a severe hit.
The sell-off was driven by concerns over high expenditures in AI without immediate revenue benefits.
In New York, the S&P 500 fell by 2.3%, while the Nasdaq, known for its technology focus, plummeted by 3.6%, marking their largest single-day declines since 2022.
The Dow Jones Industrial Average dropped 1.2%. Major technology firms such as Nvidia, Alphabet, Microsoft, Apple, and Tesla led the losses.
Nvidia, a key player in the AI sector, saw its shares plummet 6.8%, extending a 15% loss over the past two weeks. The company is set to release its financial results at the end of August.
Meanwhile, Tesla’s shares fell by more than 12% following disappointing financial results that unsettled investors.
Alphabet, the parent company of Google and YouTube, saw a 5% decrease in its stock price. Despite reporting better-than-expected financial results earlier in the week, Alphabet’s commitment to high spending on AI for the remainder of 2024 raised concerns among investors.
In Asia, Japan’s Nikkei index led the declines, dropping by 3%. Shares of chip manufacturers, including Renesas Electronics, Tokyo Electron, and South Korea’s SK Hynix, were among the biggest losers.
Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, noted, “Investors are now becoming more concerned about all this expenditure with AI without the revenue benefit. I don’t think this will mark the start of disbelief in AI. it just simply means investors will focus more on returns in this space than just buying the whole sector.”
Additionally, market uncertainty has been exacerbated by unexpected developments in the US presidential election campaign and speculation about the timing of an interest rate cut by the US central bank.
Chioma Kalu
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