Tech Stocks Tumble as Investors Reassess AI-Fueled Market Boom

The stock market took a hit as major tech shares suffered significant losses, causing investors to reassess the AI-fuelled stock market boom. In the US, the S&P 500 and Nasdaq experienced their biggest one-day falls since 2022, with the Dow Jones Industrial Average also dropping. Companies like Nvidia, Alphabet, Microsoft, Apple, and Tesla were among the hardest hit.

In Asia, Japan’s Nikkei index led declines with a more than 3% drop. Technology companies, especially those involved in AI, have been driving much of the stock market gains this year. Nvidia, a major player in AI chips, saw its shares plummet by 6.8%, while Tesla’s stock dropped by over 12% following disappointing financial results.

Alphabet, Google’s parent company, also saw a 5% decrease in its stock price despite beating analyst expectations in its financial results. The company announced that its spending on AI technology would remain high for the rest of 2024.

Investors are now expressing concerns about the high expenditure on AI technology without seeing significant revenue benefits. Portfolio Manager Jun Bei Liu noted that investors will likely focus more on returns in the AI sector rather than blindly investing in the entire industry.

The recent market downturn comes amidst uncertainties surrounding the US presidential election campaign and the timing of an interest rate cut by the US central bank. Despite the setbacks, experts believe that this is not the end of the AI era, but rather a shift towards a more cautious approach to investing in the sector.