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Tech Stocks Plunge Amid AI Spending Fears
· Confirmed
In Short: Tech stocks tumbled for the second day in a row as concerns over massive AI investments intensified.
Tech stocks continued their downward spiral on Friday, with major firms like Reddit and Intel experiencing significant losses. Reddit's stock dropped by 29% after reporting weaker-than-expected daily user figures and warning that Google's AI-driven search was impacting referral traffic. Intel's shares plummeted by 28%, while Alphabet's stock price fell another 1.4% following a 12% drop on Thursday.
Major tech companies have significantly increased their AI spending, with Meta, Alphabet, Oracle, Amazon, and Microsoft collectively committing to spend $800 billion by 2026. However, these investments are not translating into the expected earnings, causing investor anxiety and raising fears of an AI bubble.
Among other semiconductor stocks, smartphone IC designer MediaTek Inc. Saw its shares fall by 3.21%, closing at NT$3,915.00, while IC packaging and testing firm ASE Technology Holding Co. Ended the day down 2.20% at NT$668.00. The tech-heavy Nasdaq Composite index dropped 2.9% on the last trading session of the month, while the broader S&P 500 index shed 1.8%, marking the worst one-day performance since June for both indices.
AI chip stocks also saw broad declines, with concerns over valuations and financing. Bitcoin and Ethereum experienced substantial monthly declines, impacting crypto-related stocks. The STAR50 index in China has plunged 40% in less than four months, wiping out about $480 billion in market value, highlighting the risks of inflated valuations and uncertain demand for AI technology.
Alphabet's stock market value fell sharply on Thursday, losing more than $500 billion (£374 billion) after revealing that AI summaries provided as top answers to search queries were affecting its core search advertising revenue. Negative free cash flow of $9.1 billion and surging capital expenditure further raised market concerns.
CoreWeave's shares fell 15.5% on Wednesday, with reports of its bond yields reaching distressed debt levels adding to investor worries. Despite this, the company's CEO expressed optimism about its cost of capital at a Bloomberg event in Stockholm.
Investors have turned ruthless, punishing any signs of disappointment in third-quarter earnings, according to analysts. The tech sector's aggressive pursuit of AI build-out is showing significant growing pains, with firms ramping up investment in equipment and expecting even more significant increases in the following quarter.
What this adds
The plunge in tech stocks reflects growing concerns over the financial returns of artificial intelligence investments, as highlighted by previous reports. Among other semiconductor stocks, smartphone IC designer MediaTek Inc. shed 3.21 percent to end at NT$3,915.00, and IC packaging and testing firm ASE Technology Holding Co. closed down 2.20 percent at NT$668.00.
Background
US tech stocks fell sharply on Thursday as concerns over massive AI investments intensified.
Tech stocks lost over $1 trillion in value amid growing concerns over the financial returns of artificial intelligence investments.
What's confirmed
- Tech stocks continued their downward spiral on Friday, with major firms like Reddit and Intel experiencing significant losses. Reddit's stock dropped by 29% after reporting weaker-than-expected daily user figures and warning that Google's AI-driven search was impacting referral traffic. Intel's shares plummeted by 28%, while Alphabet's stock price fell another 1.4% following a 12% drop on Thursday.
- Major tech companies have significantly increased their AI spending, with Meta, Alphabet, Oracle, Amazon, and Microsoft collectively committing to spend $800 billion by 2026. However, these investments are not translating into the expected earnings, causing investor anxiety and raising fears of an AI bubble.
- Among other semiconductor stocks, smartphone IC designer MediaTek Inc. Saw its shares fall by 3.21%, closing at NT$3,915.00, while IC packaging and testing firm ASE Technology Holding Co. Ended the day down 2.20% at NT$668.00. The tech-heavy Nasdaq Composite index dropped 2.9% on the last trading session of the month, while the broader S&P 500 index shed 1.8%, marking the worst one-day performance since June for both indices.
- AI chip stocks also saw broad declines, with concerns over valuations and financing. Bitcoin and Ethereum experienced substantial monthly declines, impacting crypto-related stocks. The STAR50 index in China has plunged 40% in less than four months, wiping out about $480 billion in market value, highlighting the risks of inflated valuations and uncertain demand for AI technology.
- Alphabet's stock market value fell sharply on Thursday, losing more than $500 billion (£374 billion) after revealing that AI summaries provided as top answers to search queries were affecting its core search advertising revenue. Negative free cash flow of $9.1 billion and surging capital expenditure further raised market concerns.
- CoreWeave's shares fell 15.5% on Wednesday, with reports of its bond yields reaching distressed debt levels adding to investor worries. Despite this, the company's CEO expressed optimism about its cost of capital at a Bloomberg event in Stockholm.
- Investors have turned ruthless, punishing any signs of disappointment in third-quarter earnings, according to analysts. The tech sector's aggressive pursuit of AI build-out is showing significant growing pains, with firms ramping up investment in equipment and expecting even more significant increases in the following quarter.
What's still developing
- Tech stocks tumbled for the second day in a row as concerns rise over the hundreds of billions of dollars firms are investing in artificial intelligence (AI).
- "If we see AI stocks continue to struggle in the coming days, it could suggest the AI trade is past its peak, and investors will be looking for a new theme to drive markets," she said.
- Taipei, Oct. 30 (CNA) Shares in Taiwan plunged by just under 2.5 percent Friday, led by major AI-related stocks, after tech stocks on American markets saw heavy losses overnight amid growing concerns that massive AI investments would not deliver comparable returns, analysts said.
- And it shows how even as worries about some A.I. companies have intensified, money has not fled the stock market but is instead being redeployed within it.
- AI-related stocks account for 42% of China’s market capitalisation and 57% of turnover across mainland-listed A-shares and Hong Kong-listed H-shares, according to Goldman Sachs, leaving a large share of the market exposed to the downturn.
- Get to know where the market bulls are investing to identify the right stocks.
- The comments, among the first by airline chiefs since the attack, highlight the industry’s struggle to address safety and security concerns after an incident that caused the jet to plunge 16,000 feet in 30 seconds.
- The 10-year Treasury yield's plunge highlights the market's sensitivity to geopolitical and economic developments, a trend observed in previous crises.
- Home » Trending » CoreWeave Stock Plunges 12% Amid Funding Concerns Despite Analyst Optimism CoreWeave’s stock experienced a significant decline of 12% on October 16, with projections indicating a 25% drop for the week.
- The makers of computer chips were particularly hard hit.
- On October 15, following comments from Nvidia CEO Jensen Huang, which appeared to alleviate some concerns, CoreWeave’s stock rebounded briefly.
Sources
- BBClink
- Focus Taiwanlink
- Warpbeatlink
- Tradingkeylink
- Thevibeslink
- Economictimeslink
- Profitlink
- Arabnewslink
- Newslink
- Mininglink
- WarpBeat — background on US Tech Stocks Plunge Amid AI Spending Worries link
- WarpBeat — background on Tech stocks wipe out $1 trillion in value as concerns deepen about the AI boom link
- Bloomberg Podcasts — video link