Financial markets in the U.S. and Asia fell sharply as investors sold shares in technology companies, with artificial intelligence (AI) stocks particularly hard hit.
In New York trading on Wednesday, the S&P 500 index fell 2.3%, and the Nasdaq index, which is dominated by technology stocks, fell 3.6%, its largest one-day decline since 2022.
These losses were caused by major companies such as Nvidia, Alphabet, Microsoft, Apple, and Tesla.
On Thursday, Japan’s Nikkei fell 3%, leading Asian stocks lower.
Stocks in technology companies, especially those related to artificial intelligence, have fueled the stock market’s gains this year.
AI chip giant Nvidia is one of the main beneficiaries of the AI boom, and its stock price fell 6.8%. It has lost about 15% of its value in the past two weeks.
The company is due to report financial results at the end of August.
Tesla, the electric car maker owned by billionaire Elon Musk, disappointed investors with its latest financial performance, sending its shares down more than 12%.
Shares of Google and YouTube parent Alphabet both fell 5%. Earlier this week, the company reported financial results that beat analysts’ expectations but said its spending would remain elevated through the remainder of 2024.
Like many of its rivals, Alphabet has been investing billions of dollars in the development and adoption of artificial intelligence technology.
In Asia, Japan’s chipmakers Renesas Electronics and Tokyo Electron and South Korea’s SK Hynix suffered larger declines.
“Investors are now increasingly concerned that all the spending on artificial intelligence is not delivering revenue benefits,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.
“I don’t think this will mark the beginning of skepticism about artificial intelligence… it just means investors will focus more on returns in this space rather than just buying into the industry as a whole,” she added .
Major surprises in the U.S. presidential election and the timing of the Federal Reserve’s interest rate cut also keep investors wary.
