US Tech Stock Crash: Friday was a nightmare for technology companies in the US stock market. A sudden fall in the shares of major tech companies has spooked investors around the world. The biggest hit was chip manufacturing company Intel, whose shares fell 28.6 percent in a single day. Not only Intel, Nvidia, AMD, Dell, HP shares also saw heavy selling. This overall decline creates an atmosphere of fear in the market. Now a big question is being raised whether the bubble of artificial intelligence i.e. AI has started to burst in America.
Nasdaq’s biggest one-day decline since June 5
The stampede in tech stocks had a direct impact on US indices. On Friday, October 30, the Nasdaq Composite Index fell 2.86 percent, or 747 points, to close at 25,437. In percentage terms, this is the biggest one-day decline in the Nasdaq since June 5. The Nasdaq has fallen 7.8 percent since its record close on Oct. 6. Apart from this, the S&P 500 index fell 1.82 percent to 7,580. At the same time, the Dow Jones Industrial Average also fell 1.09 percent or 572 points to close at 51,770. The return of the S&P 500 along with the Nasdaq remained negative for the entire month of October, while the Dow Jones rose slightly. According to Reuters, the Nasdaq 100 lost more than $2 trillion in market value in the month of October alone.
Stocks from Nvidia to Dell rallied.
Amazon’s poor quarterly results, along with Intel’s, played a major role in Friday’s tsunami. In addition to the semiconductor sector as a whole, these results also impacted the server sector. Shares of Nvidia, the largest AI chip maker, fell 4.2 percent. At the same time, shares of another major chip company, AMD, saw a steep decline of around 11 percent. Server manufacturing companies also fared worse. Dell shares fell 10.8 percent, while HP shares fell 9.6 percent. The impact of this sell-off will be evident on markets around the world on Monday, November 3. In particular, Taiwan’s stock markets, apart from South Korea, could see a sharp drop, as the growth of both these markets is entirely dependent on technology stocks.
Debt-burdened companies, questions raised on returns
Amazon’s poor results with Intel cast doubt on the market’s ongoing boom due to AI. Investors are now asking the direct question of how long it will take tech companies to get a return on the massive investment they are making in AI. In the past few years, apart from US tech companies, semiconductor companies have raised a lot of money by taking loans. Alphabet, along with Meta and Amazon, have issued billions of dollars in bonds over the past four years. Now Meta has come up with a new plan to raise $97.5 billion. At the same time, Microsoft is also looking to raise about $25 billion through bonds. Morgan Stanley estimates that investment on AI infrastructure will exceed $1 trillion next year. This mounting debt burden on companies has given investors sleepless nights.
