Tech stocks had a rough week as worries grew about overvalued stocks and the uncertain future of the artificial intelligence (AI) boom. The Nasdaq Composite fell 0.21% on Friday after falling 3.04% over the week. It was the worst performance since April when people were worried that the AI bubble was going to burst. On Friday, the S&P 500 went up 0.13%, making up for losses earlier in the week. The Dow also went up a little, by 0.16%.
Investor mood is still shaky. The CBOE Volatility Index shot up 16% in the middle of the week, and the Fear and Greed index showed “extreme fear.” This is the lowest level since April. Leaders in the tech industry from Goldman Sachs and Morgan Stanley have said they are not sure about tech valuations. This has made the market even more nervous, although earnings expectations have recently gone up.
Nvidia and Palantir, two important AI stocks, fell sharply by 7.1% and 11.2%, respectively, ending their worst week since April. Oracle’s stock price went up 36% in September after it teamed up with OpenAI. However, it lost almost all of those gains this week, going down 8.89%. This shows increasing uncertainty about whether big investments in AI chip technology and infrastructure will be worth it.
There were also worries about the financial risks that come with OpenAI’s big chip investments, which are worth about $1.4 trillion. Recently, top executives have changed their minds about needing government help to pay for these costs.
The longest government shutdown in US history also affects the larger market. It is bad for the economy and consumer confidence. The most recent consumer sentiment survey from the University of Michigan shows that it has dropped to its lowest point since June 2022. Many Americans are worried about the shutdown.
Still, there was a glimmer of hope on Friday when Senate Democrats suggested a deal to end the shutdown. The Republicans still have the upper hand, though. This hope helped stocks bounce back from their lowest points of the day.
Market strategists say that the current drop could be a good time for long-term investors to buy. This is especially true if the shutdown ends soon.
