stockmarket

Stock markets tumble amid jitters over tech companies’ growth


Stock markets in Europe and Asia took a tumble on Thursday as jitters over the future artificial intelligence-driven growth of major tech companies sparked a global sell-off.

The pan-European Stoxx 600 closed the day down 0.7%, having been hit by a near 4% decline in the Dutch chipmaker ASML, a 7% drop in Germany’s Infineon Technologies, and a 13.7% fall in Switzerland’s semiconductor company STMicroelectronics.

The rout began in the US overnight, where the tech-focused Nasdaq fell 3.6% on Wednesday, marking its biggest single-day decline since 2022. About $1tn (£776bn) was knocked off the value of the Nasdaq 100, which covers the most valuable firms on the index.

The main losers were AI-related companies, including Nvidia, Tesla and the Google-owner Alphabet, whose shares have soared in recent months. Investors have poured money into the sector, to ensure they did not miss out on a potential tech boom in artificial intelligence.

The fall has raised concerns about whether excitement over major tech stocks, known as the magnificent seven, has been overblown. Nvidia fell 7%, Alphabet fell 5%, Microsoft dropped 3.5% and Apple lost 3%. Other magnificent seven stocks also fell, including Facebook owner Meta, which dropped 5.6%.

Tesla had its worst decline since 2020, dropping 12%. The company’s boss, Elon Musk, had reported a 45% fall in profits and pushed back plans to unveil self-driving robotaxis from August to October, igniting scepticism among investors. Musk has been trying to drum up interest in plans for the robot taxis, artificial intelligence and “genuinely useful” humanoid robots, as demand for Tesla’s electric cars has cooled.

Readers Also Like:  Ripple's XRP greenlighted by Dubai Financial Services Authority ahead of anticipated IPO

The stock market losses later spread to Asia, where tech-related firms continued their decline. That included Samsung, which fell 2%, Sony, which fell 5%, and tech investor SoftBank, which fell 9.4%. Japan’s Nikkei finished the session down 3%.

However, the AJ Bell investment analyst Dan Coatsworth said the sell-off may be a “necessary correction”.

He added: “It is worth putting last night’s weakness into perspective, given indices were recently trading at record highs and there were big moves in some enormous companies.

skip past newsletter promotion

“Whether this is a necessary correction to remove some froth from the market or something more dramatic will depend on forthcoming earnings from the likes of Microsoft, Meta, Apple and Amazon next week, as well as AI-star Nvidia at the end of August.”

Early trading on Wall Street was more subdued on Thursday, with the Nasdaq, Dow Jones and S&P 500 indices slightly up, as GDP data showing that the US economy grew faster than expected in the three months to the end of June.



READ SOURCE

This website uses cookies. By continuing to use this site, you accept our use of cookies.