Financial markets in the US and Asia took a sharp nosedive as investors rushed to sell off shares in technology companies, particularly those involved in artificial intelligence (AI). The S&P 500 plummeted by 2.3% and the Nasdaq, known for its tech-heavy composition, saw a staggering 3.6% drop in Wednesday’s trading session in New York, marking their biggest one-day declines since 2022. The Dow Jones Industrial Average also fell by 1.2%.
Major tech firms such as Nvidia, Alphabet, Microsoft, Apple, and Tesla were among the key drivers behind the market turmoil. Nvidia, a leading AI chip giant, witnessed a significant 6.8% decrease in its stock price, losing approximately 15% of its value over the past two weeks. The company is scheduled to report its financial results at the end of August.
Tesla, the electric car manufacturer headed by multi-billionaire Elon Musk, experienced a substantial drop of over 12% following disappointing financial results that failed to meet investors’ expectations. Similarly, Google and YouTube parent company Alphabet saw a 5% decrease in its stock price despite surpassing analyst predictions in its recent financial report. The company stated that its spending would remain high for the remainder of 2024 as it continues to invest heavily in AI technology.
In Asia, Japan’s Nikkei index led the downward trend with a 3% decline, with chip makers Renesas Electronics and Tokyo Electron in Japan, and South Korea’s SK Hynix also experiencing significant losses.
Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners, highlighted investors’ growing concerns about the substantial investments in AI technology without corresponding revenue benefits. However, Liu believes that this downturn does not signify a lack of faith in AI but rather a shift towards a more discerning approach focused on returns within the sector.
The market volatility comes amidst uncertainties surrounding the US presidential election campaign and speculation regarding the timing of an interest rate cut by the US central bank, adding to investors’ apprehensions about the future direction of the financial markets.
