AI Whiplash Jolts Stocks as Sentiment Lurches From Fear to Greed
Artificial intelligence could wipe us all out. Or it might just kill our unwanted subscriptions.
Fears about money flow have been evident in semiconductor stocks amid the rapid swings between fear and greed in the AI sector. Over the past two weeks, the market has seen hundreds of billions shift between AI-exposed stocks, causing investor anxiety. Nancy Tengler, CEO of Laffer Tengler Investments, noted that the market's narrative changes frequently.
The shift began on September 12 when Anthropic CEO Dario Amodei and OpenAI's Sam Altman, along with SpaceX CEO Elon Musk, called for slowing AI model development. This prompted AI infrastructure stocks to plummet as investors worried about reduced spending on computing equipment. The Nasdaq 100 Index dropped over $600 billion in market value in two days, erasing nearly 1.5% of its value.
However, fears subsided as excitement about Meta Platforms' Muse personal assistant surged, driving AI-exposed stocks back into favor. Meta's shares jumped 11% on September 21, putting the company on track for its best month in over a decade. The Philadelphia Stock Exchange Semiconductor Index (SOX) climbed 6% over two days, pushing the Nasdaq 100 to a record high since early June.
The market's volatility has seen US$3 trillion added to the Nasdaq 100 since September 15. While rapid sentiment shifts are not uncommon in this market, the ongoing AI boom and economic importance have left investors restless, especially concerning AI disruption. Factors like rising interest rates and data center backlash add to the risk of AI spending.
Semiconductor stocks, which had doubled from the start of the year to mid-June, have since lost 29% of their value, but the index has since rebounded. The sell-off has exposed the market to more stable investments, such as Nvidia and Broadcom, whose valuations have rebounded significantly. However, some investors remain cautious due to the uncertainty surrounding AI's future.
Analysts emphasize the need for humility and caution in investing, as the market remains healthy despite the volatility.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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