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| Tech Stocks Plunge: Financial Markets in US and Asia Experience Sharp Declines Amid AI Sector Sell-Off |
Financial markets in both the US and Asia experienced significant declines as investors offloaded shares in technology companies, particularly those related to artificial intelligence (AI). On Wednesday in New York, the S&P 500 fell by 2.3%, and the tech-heavy Nasdaq dropped 3.6%, marking their largest one-day declines since 2022. The Dow Jones Industrial Average also saw a decrease of 1.2%. Major firms like Nvidia, Alphabet, Microsoft, Apple, and Tesla were central to these losses.
Nvidia, a key player in the AI chip market and one of the major beneficiaries of the AI boom, witnessed a 6.8% drop in its shares, bringing its two-week decline to about 15%. The company is expected to report its financial results at the end of August. Tesla, Elon Musk's electric vehicle company, saw its shares plummet by over 12% following disappointing financial results.
Google and YouTube's parent company, Alphabet, experienced a 5% drop in its stock price. Despite reporting better-than-expected financial results earlier in the week, Alphabet announced that its spending would remain high throughout the rest of 2024, primarily due to substantial investments in AI development and adoption. This significant expenditure in AI, without immediate revenue benefits, has made investors cautious. Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, noted that while this isn't the beginning of disbelief in AI, investors will now focus more on returns in the sector rather than buying broadly.
On Thursday, the downturn continued in Asia, with Japan's Nikkei index leading the declines, falling by 2.8%. The broader market sentiment has been influenced by major surprises in the US presidential election campaign and uncertainties regarding the timing of an interest rate cut by the US central bank.
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