Nasdaq Drops 0.6% as Tech Stocks Fail to Keep Gains
Tech stocks fell drastically on Wednesday morning, with AMD and Palantir dropping sharply as investor sentiment changes.
Quick overview
- The tech rally appears to be over, with the Nasdaq Composite falling 0.6% and AMD dropping 4% despite better-than-expected earnings.
- Investor sentiment towards AI stocks is declining, leading to significant losses for major tech companies like Alphabet and Palantir.
- While the current downturn may indicate a short-term pullback, analysts believe the AI market's growth potential remains strong.
- The Dow Jones experienced a smaller decline of 0.14%, suggesting that the overall market may still be on a bullish trajectory.
The tech rally is truly over, as evidenced by a poor showing from AMD on Wednesday and a decline on the tech-heavy index, the Nasdaq Composite.
The Nasdaq fell 0.6% on Wednesday as the market dipped heavily. Advanced Micro Devices (AMD) dropped 4% and reported earnings that were higher than expected but were undercut by negative sentiment leading up to the earnings report release.
The S&P 500 also declined Wednesday morning, losing 0.4% as a number of stocks simply bled investors. Some of the biggest losses were from tech companies as public sentiment toward AI stocks faltered before AMD reported quarterly earnings.
Tech Stocks Are in Trouble
Across the stock market indices, technology stocks were absolutely slaughtered late Tuesday and then continued to bleed out Wednesday morning. Alphabet (GOOG) lost 2.13%, and Super Micro Computers (SMCI) fell 6.60%.
AMD posted 36% gains and should have performed well this week, but the company’s guidance was right on par with analyst expectations. That left investors underwhelmed and resulted in a tech stock decline. On Tuesday, Palantir (PLTR) stock dropped 8% and may not be done falling just yet.
In fact, this could be the start of a wider market trend that seriously hurts technology stocks. Market sentiment toward artificial intelligence-fueled stocks is waning, and some analysts are saying that the current market trajectory for these stocks is untenable.
What we may be seeing is short-term pullback on tech stocks, particularly AI ones. These stocks may recover in a week or so and continue on their upward trajectory, as this market niche is still incredibly profitable and is seeing rapid growth over the past few years. It does not appear that there is any end in sight for now for AI market growth and fears that this technology will sputter out may be premature.
The Dow Jones suffered less severely than other indices Wednesday morning, with a dip of only 0.14%, as that index is not as tech heavy as the others. Stock indices are still near their all-time high, and today’s retreat is likely just a temporary setback for a mostly bullish market.
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