Image source, Getty Images
- author, Joao da Silva
- role, Business reporter
Financial markets in the United States and Asia fell sharply as investors sold shares in technology companies, with artificial intelligence (AI) stocks being particularly hard hit.
In New York on Wednesday, the S&P 500 index fell 2.3%, while the tech-heavy Nasdaq index dropped 3.6%, both of which were their biggest one-day declines since 2022. The Dow Jones Industrial Average fell 1.2%.
The losses were caused by major companies such as NVIDIA, Alphabet, Microsoft, Apple and Tesla.
Japan's Nikkei average fell more than 3 percent on Thursday, leading losses in Asian shares.
Technology companies, particularly those involved in AI, have driven much of the stock market's gains this year.
Shares of AI chip giant Nvidia, one of the companies that has benefited most from the AI boom, fell 6.8%. The company's shares have fallen about 15% in the past two weeks.
The company is due to report financial results at the end of August.
Shares in billionaire Elon Musk's electric car maker Tesla Inc. fell more than 12% after its latest financial results disappointed investors.
Shares in Google and YouTube parent Alphabet fell 5% after the company reported earnings earlier this week that beat analysts' expectations but said spending would remain high for the rest of 2024.
Alphabet, like many of its competitors, has poured billions of dollars into developing and deploying AI technology.
In Asia, shares in Japanese semiconductor makers Renesas Electronics and Tokyo Electron, as well as South Korea's SK Hynix, fell sharply.
“Investors are now increasingly concerned about spending on AI without any revenue benefit,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners.
“I don't think this will be the start of a distrust of AI, it just means investors will be more focused on gains in this area rather than buying the entire sector,” she added.
Investors are also wary of any big surprises in the U.S. presidential election and the timing of any interest rate cuts by the U.S. central bank.
