Investors in the technology-heavy Nasdaq-100 have seen roughly $1.8 trillion in value disappear as the index slipped into its third correction of the year.
The retreat followed investors’ concerns that Democratic gains in the midterm elections could slow the expansion of artificial intelligence infrastructure.
Tech shares had initially risen after the election results. Tech-critical candidates then swept to power in Texas, Georgia and Ohio, which account for some 40% of planned US data-centre capacity.
The early gains did not last. The Nasdaq dropped 5% on Thursday as the selloff accelerated, and weakness in chip stocks spread into other parts of the economy. The decline erased the post-midterm gains.
By Monday, the Nasdaq-100 had entered correction territory. It closed at 27,989.82, 10.4% below its record close of 31,224.47 on 6 October. It was the index’s third fall of at least 10% from a recent peak this year.
Intel shares dropped another 8.8% on Monday. The stock has fallen 57.4% since its record close of $140.94 a share on 22 June.
An analyst told The Wall Street Journal: ‘This is a true panic’ that is ‘100% about the chip stocks and the potential slowdown in the AI trade’.
Steve Sosnick, chief strategist at Interactive Brokers, said: ‘The main root of it is people are questioning some of the assumptions they made about AI’.
JPMorgan analysts said they still expected the artificial intelligence boom to continue, though its expansion could become more expensive, slower and concentrated among fewer companies. ‘We expect that the AI boom will remain on track, but may become costlier, slower, and more consolidated in the coming years.’
The selling was sharper in technology than across the wider market. The S&P 500 ended Monday down 0.5%, while the Nasdaq-100 remained up 10.9% for the year through Monday, according to FactSet data.
Comments (0)