By D. Maan, Jadetimes News
Global Financial Markets Reel as Tech Stocks Plunge
The US and Asian financial markets plunged after investors sold off their technology stock portfolios, though companies related to artificial intelligence were the biggest losers. The S&P 500 lost 2.3% while the Nasdaq dropped 3.6% in New York trading Wednesday, with both of their largest one day percentage declines since 2022. The Dow Jones Industrial Average slid 1.2%.
The biggest technology companies leading the decline were Nvidia, Alphabet, Microsoft, Apple, and Tesla. Meanwhile, in Asia, it was Japan's Nikkei index that spearheaded the losses on Thursday, slipping well over 3%. The gains taken in by the market some time ago, driven by technology and AI related companies, have been partially reversed.
Nvidia stock, which makes chips used in AI and has been one of the big winners during the craze, fell 6.8%. Shares have dropped 15% over the last two weeks as the company is scheduled to report its quarterly financial results by the end of August.
It was a dreadful start to the week for Tesla, with its share price plummeting by over 12 percent following poor financial results that did not meet investor expectations. Alphabet, the parent company of Google and YouTube, fell 5%. It said it would keep spending at high levels throughout 2024, despite announcing stronger than expected financial results earlier this week. Alphabet has spent billions developing and adopting AI, like many of its peers.
The big losers in Asia included chipmakers Renesas Electronics and Tokyo Electron, as well as South Korea's SK Hynix. Jun Bei Liu, a portfolio manager at Tribeca Investment Partners, said that investors are getting tired of large AI related spending without short term revenue growth. "I don't think this will mark the start of the disbelief in AI. it just simply means investors will focus more on returns in this space than just buying the whole sector," Liu said.
Adding to the market uncertainties are the US presidential election campaign surprises and bets on the timing of an interest rate cut by the US central bank.
Big swings in the markets serve as proof of increasing caution among investors, not just regarding the high costs related to AI developments but generally toward the economic and political outlook.
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