Tech Selloff Drives U.S. Stocks Lower as AI Concerns Rattle Investors
US Stocks Tumble as Tech Sector Leads Downturn
U.S. stocks experienced a sharp decline on Thursday, with technology stocks leading the market downturn. The Nasdaq Composite fell nearly 3%, dragged down by significant losses in major tech companies such as Meta and Microsoft.
The sell-off in tech stocks was largely attributed to concerns over substantial investments in artificial intelligence (AI). The S&P 500 and Dow Jones Industrial Average also saw notable decreases, reflecting the broader market impact.
Recent earnings reports from tech giants exceeded estimates but failed to meet investor expectations in certain areas. Microsoft’s stock dropped 6% after projecting lower-than-expected revenue for the current quarter, citing investments in cloud computing for AI as a factor. Similarly, Meta’s shares fell 4% following the announcement of increased capital expenditures for AI, raising its forecast for the year.
Despite the spending, UBS analysts remain optimistic about future revenue growth from these AI investments.
On the economic front, the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index, showed a slight decrease to 2.1% year-over-year in September. However, the core index, excluding food and energy prices, was higher than expected at 2.7%. Jobless claims decreased more than anticipated, with 216,000 claims reported last week.
In other market news, Goldman Sachs predicts a further 8% increase in gold prices by the end of 2025. Jeremy Grantham, a renowned investor, warns that AI hype may be a bubble similar to past tech manias.
The cryptocurrency sector also made headlines, with Coinbase CEO anticipating increased political support for cryptocurrency in the next Congress. Additionally, Microstrategy announced plans to raise $42 billion to invest in bitcoin.
In commodities, oil futures saw an increase, with West Texas Intermediate crude and Brent crude both rising. Gold prices slipped by 1.6%, while the 10-year Treasury yield remained relatively stable. Bitcoin traded around $70,000.
As markets continue to react to tech sector developments and economic indicators, investors remain cautious about the impact of AI investments on company financials and overall market performance.
