Global Markets React as AI Stocks Experience Significant Decline

Financial markets in both the US and Asia have experienced substantial declines as investors rapidly sell off shares in technology companies, particularly those associated with artificial intelligence (AI). This week has seen notable downturns, marking the largest single-day losses in the markets since 2022.

In New York’s Wednesday trading, the S&P 500 fell by 2.3%, and the tech-heavy Nasdaq experienced a significant drop of 3.6%. The Dow Jones Industrial Average also declined by 1.2%. Major technology firms, including Nvidia, Alphabet, Microsoft, Apple, and Tesla, were among those leading the downturn.

On Thursday, Japan’s Nikkei index mirrored these declines in Asia, falling by 3%. This sell-off comes after a period where technology and AI-related stocks had significantly driven market gains.

AI chip giant Nvidia saw its shares decrease by 6.8%, contributing to a total loss of about 15% over the past two weeks. Investors are eagerly awaiting Nvidia’s financial results, which are set to be reported at the end of August.

Elon Musk’s electric car company Tesla also faced a steep decline, with shares dropping more than 12% following financial results that did not meet investor expectations. Alphabet, the parent company of Google and YouTube, saw a 5% decrease in its stock price. Although Alphabet’s recent financial results exceeded analyst expectations, the company announced continued high spending for the remainder of 2024, primarily focused on AI development.

In Asia, notable declines were seen among chip makers, including Renesas Electronics and Tokyo Electron in Japan, and South Korea’s SK Hynix. These companies have been heavily invested in AI technology.

“Investors are now becoming more concerned about all this expenditure with AI without the revenue benefit,” commented Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners.