By C. Perera, JadeTimes News
Financial markets in the US and Asia have experienced significant declines as investors offload shares in technology companies, with AI stocks particularly affected. On Wednesday in New York, the S&P 500 dropped 2.3%, and the tech heavy Nasdaq fell 3.6%, marking their largest one day declines since 2022. The Dow Jones Industrial Average decreased by 1.2%. Major companies such as Nvidia, Alphabet, Microsoft, Apple, and Tesla drove these losses.
In Asia, Japan's Nikkei index led the declines on Thursday, falling by over 3%. AI related technology stocks, which have been a significant driver of this year's stock market gains, were notably impacted. Nvidia, a leading AI chip manufacturer, saw its shares decline by 6.8%, losing about 15% of its value in the past two weeks. The company is scheduled to report financial results at the end of August.
Tesla's shares dropped more than 12% following disappointing financial results. Alphabet, the parent company of Google and YouTube, saw a 5% decline in its stock price despite reporting better than expected financial results earlier this week. The company indicated that its spending would remain high through 2024 as it continues to invest heavily in AI technology.
In Asia, major chip makers such as Renesas Electronics, Tokyo Electron in Japan, and South Korea's SK Hynix were among the significant decliners. Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, noted that investors are increasingly concerned about the extensive AI related expenditures without corresponding revenue benefits. She added that this shift in investor focus may lead to greater scrutiny of returns within the AI sector rather than indiscriminate investment.
Additionally, investors are cautious due to major surprises in the US presidential election campaign and uncertainty surrounding the timing of an interest rate cut by the US central bank.
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