Financial markets in the United States and Asia fell sharply as investors sold shares of technology companies, with stocks in the artificial intelligence (AI) sector particularly hard hit.
In New York trading Wednesday, the S&P 500 lost 2.3% and the tech-heavy Nasdaq fell 3.6%, their biggest one-day declines since 2022. The Dow Jones Industrial Average fell 1.2%.
The losses were caused by major companies including Nvidia, Alphabet, Microsoft, Apple and Tesla.
On Thursday, Japan’s Nikkei index was the main drag in Asia, falling more than 3%.
Stocks of technology companies, particularly those related to AI, have driven much of this year’s stock market gains.
AI chip giant Nvidia, which has been one of the biggest beneficiaries of the AI boom, saw its shares fall 6.8%. It has lost about 15% of its value in the past two weeks.
The company is expected to release its financial results at the end of August.
Shares of billionaire Elon Musk’s electric car maker Tesla fell more than 12% after its latest financial results disappointed investors.
Shares of Alphabet, the parent company of Google and YouTube, fell 5%. Earlier this week, the company reported financial results that beat analysts’ expectations but said its spending would remain elevated for the rest of 2024.
Alphabet, like many of its competitors, has invested billions of dollars in the development and adoption of AI technology.
In Asia, chipmakers Renesas Electronics and Tokyo Electron in Japan and SK Hynix in South Korea were among the biggest losers.
“Investors are now increasingly concerned about all this AI spending without any revenue benefit,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.
“I don’t think this will mark the beginning of distrust in AI… it just means that investors will focus more on returns in this space than just buying the whole sector,” she added.
Investors are also wary after major surprises in the US presidential campaign and the timing of the US central bank’s interest rate cuts.
