This week, tech stocks caused a big drop on Wall Street. The Nasdaq Composite had its worst three-day drop since April, losing more than $1.5 trillion in market value. Investors are leaving once-hot stocks because they are worried about high prices and AI-driven changes.
Jim Reid of Deutsche Bank says that the market has changed from thinking that all tech stocks are winners to being able to tell which ones are clearly winners and which ones are losers. Interest in AI is waning, which is causing a shift away from high-growth stocks.
Anthropic’s new AI tools for the legal field made people worry that businesses might stop paying for expensive software subscriptions. This caused software ETFs to drop for eight days, with Salesforce down 28% so far this year.
Microsoft, Alphabet, and Amazon all announced plans to spend a lot of money on data centers, but investors are unsure if these will make money because expectations are so high. After earnings, Amazon’s stock fell 11%, and Microsoft’s stock fell 10% earlier.
Tech stocks were already expensive after years of gains, so they were ready for a quick sell-off. AMD fell 17% on weak guidance, its worst day since 2017. The uncertainty about earnings is making things more unstable.
