Gathering AI storm clouds doom tech stocks to darkest day in a year
Nov 5 (Reuters) - Big tech stocks slumped Thursday, putting them on track for their biggest decline since the "Liberation Day" rout last year, the most significant shakeout yet in what has been a punishing autumn for the AI trade.
Market turmoil gripped tech stocks on Thursday, setting the stage for the worst decline in nearly a year, according to Reuters. Big tech companies experienced a substantial drop, hinting at the beginning of a possible correction in the AI sector. The Nasdaq 100 index was on track to lose over $2 trillion in market value, driven by investor concerns about potential government interference in AI infrastructure expansion.
Analysts and portfolio managers attributed the decline to the surge in stock prices earlier in the year and the financing worries that have plagued smaller infrastructure firms. Data center construction, a key component of the AI trade, faced uncertainties due to delays and potential setbacks, with around 30% of expected US data center capacity additions at risk.
CoreWeave, a neocloud company, saw its shares drop to a record high level of default spreads, while hyperscalers like Amazon and Alphabet also experienced declines. The market appeared to be transitioning from the promise of AI to the reality of its costs, with many AI-related stocks facing overvaluation concerns.
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