S&P 500 Down for Fourth Consecutive Day as Bitcoin and AI Stocks Falter
Tech stocks are dipping after AI market fears escalate and Bitcoin takes a dive below $90,000 this week.
Quick overview
- Investors are becoming more risk-averse, leading to a 0.91% drop in the S&P 500 due to concerns over AI's long-term viability.
- Bitcoin has fallen below $90K as investors retreat from both cryptocurrency and tech stocks amid fears of an AI market bubble.
- Key AI-related stocks like Nvidia, Palantir, and AMD have experienced declines despite some positive earnings reports, indicating growing skepticism in the sector.
- Analysts suggest that more substantial fiscal evidence and profit proof are needed to reassure investors about the stability of AI investments.
Investors are taking fewer risks and shying away from tech stocks on rising fears about AI’s long-term viability, resulting in a 0.91% drop for the S&P 500 on Monday.
Bitcoin dropped below $90K this week as investors pulled back from cryptocurrency and technology stocks. Global fund managers for Bank of America say that investors and analysts are worried that most or all AI-related stocks are part of a bubble that could burst in the near future.
Talk of an AI market bubble has been going around for a couple years now, but with tech companies now pouring billions into the technology and banking their futures on it, investors are concerned that there may be too much riding on AI for a large number of companies. It is not just the ones that can afford the loss if the AI bubble bursts, like Microsoft, Meta Platforms, and Alphabet. Dozens of smaller companies are investing heavily in the technology, and they may soon be competing for smaller and smaller pieces of the pie.
AI Stocks Take a Dive
Already this week we have seen several key AI-related stocks suffer. Nvidia (NVDA) is down 1.04% in premarket trading for Tuesday. The company has been working to get back into the Chinese market and is facing fierce competition from other tech companies this year.
Palantir Technologies (PLTR) also declined this week, losing 2.19% of its value in early market trading for Tuesday. The software company has been pushing hard to integrate AI into their products, and they posted an excellent quarterly earnings statement that beat estimates. That was not enough to keep their stock elevated, though, and they have lost ground since their earnings report.
Advanced Micro Devices (AMD) fell 1.31% on Tuesday morning before the market opened, signaling yet another chink in the armor of the AI market. After a poor stock performance recently, this key AI stock has been dropped by some analyst firms as a top asset to invest in before the end of the year.
We anticipate further fallout in the AI sector, and even with positive earnings and excellent future guidance, many top AI and tech stocks are floundering. It may take more long-term fiscal information and greater proof of profits in the AI sector to convince investors that the bubble is not ready to burst yet.
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