Nasdaq down 2% as AI Worry Creates Market Selloff
tec stocks are in decline today and are under pressure from investors worried about AI disruption to the market.
Quick overview
- Labor reports were positive this week, but fears over AI disruption have led to a significant selloff in tech stocks.
- The Nasdaq Composite dropped 2% on Thursday, with the Dow and S&P 500 also experiencing losses.
- Leading tech stocks, particularly those related to AI, have seen steep declines as investors grow concerned about rising inflation and job displacement.
- Despite some companies like Applied Materials performing well, the overall trend indicates ongoing bearish sentiment in the tech sector.
Labor reports were positive this week, but continued fears over AI futures has investors worried, and a sharp decrease in tech stocks caused the Nasdaq to lose 2% of its value Thursday.
The Nasdaq Composite dipped on Thursday at the end of trading, but the Dow and S&P 500 also lost ground, falling 1.34% and 1.57%, respectively. A wide market selloff occurred before trading closed off for the day, and we anticipate that the bearish trend will continue through Friday.
Leading technology stocks that make up the Magnificent Seven all decreased on Thursday and then again Friday morning. Investors appear to be alarmed over the AI disruption, or artificial intelligence taking jobs from the market and disturbing the status quo. This has led to a drastic decrease in tech stock values this week.
New Inflation Report and Persistent AI Fears
The consumer price index report for January is releasing Friday, and the report is expected to show an increase of 0.3%. If that holds true, then the inflation gauge may increase by 2.5% from the previous year. These estimates come from Wall Street polls that took into consideration the opinions of economists, and investors are starting to pull back in fear of rising inflation.
The selloff has begun with tech stocks, particularly those related to the AI industry. These stocks are under attack as investors narrow down the number of AI companies they are confident in. We have seen steep drops in stock prices over the last few weeks for Microsoft (MSFT), Apple (AAPL), Advanced Micro Devices (AMD), and other leading AI-related companies. Even when they impress with earnings, their profitability is not what shareholders expect from them.
It is evident that more than just profits are important to stockholders, though, when it comes to declining stock prices for tech companies. There is a growing fear that AI will disrupt the workforce and lead to a shift in how business is conducted. Several tech companies are bucking the bearish stock trend, like Applied Materials (AMAT) with an 11% price jump. The company demonstrated strong earnings and had an excellent outlook to offer.
Cisco Systems (CSCO) dropped 12% this week as they shared their guidance for the year. Massive capital expenditure plans tanked their stock price and worried investors.
From the Magnificent Seven Stocks, Apple is down 5% with one of its worst days in months. Tesla (TSLA) is down 2.62%, and Microsoft has dipped 0.63%. We are seeing market-wide tech stock losses that indicate a trend that may persist. The overall stock market is still holding close to record highs, but the AI bubble may be in trouble and is certainly under fire this week as tech earnings season draws to a close.
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