Financial markets in the US and Asia have experienced a significant downturn as investors offload shares in technology companies, particularly those in the rapidly evolving artificial intelligence (AI) sector. In recent trading, the S&P 500 plummeted by 2.3%, while the tech-heavy Nasdaq saw a dramatic decline of 3.6%. This marks the most substantial one-day drop for both indices since 2022. The Dow Jones Industrial Average also fell by 1.2%.
The sell-off has primarily affected major corporations such as Nvidia, Alphabet, Microsoft, Apple, and Tesla. Meanwhile, Japan’s Nikkei index leads the declines in Asia, dropping over 3%.
Technology stocks, especially those linked to AI, have previously fueled much of this year’s market growth. Nvidia, a key player in AI chip manufacturing and a major beneficiary of the AI surge, saw its stock fall by 6.8%, resulting in a 15% loss of its value over the past two weeks. The company is scheduled to announce its financial results at the end of August.
Tesla, owned by billionaire entrepreneur Elon Musk, experienced a sharp decline of over 12% following disappointing financial results. Alphabet, the parent company of Google and YouTube, also saw its stock price drop by 5%. Despite reporting financial results that exceeded analyst predictions earlier this week, Alphabet cited ongoing high spending in AI development, raising investor concerns.
In Asia, the downturn impacted significant chip manufacturers, including Japan’s Renesas Electronics and Tokyo Electron, as well as South Korea’s SK Hynix.
Experts suggest that investors are increasingly wary of hefty investments in AI technologies without corresponding revenue growth. “There is a growing concern regarding the substantial expenditure on AI and the lack of immediate financial returns,” commented a portfolio manager. “This does not imply disbelief in AI; rather, it signifies a shift towards prioritizing returns over broad sector investments.”
Additionally, investor sentiment is being shaped by recent unexpected developments in the US presidential election campaign and speculation regarding the timing of interest rate adjustments by the US central bank.
