Wall Street Slides as AI Stocks Lose Luster
Wall Street experienced a downturn as AI stocks, once market leaders, faced significant declines amid high expectations and trade tensions.
U.S. stocks fell sharply on Thursday, with the tech sector leading the decline as AI companies, once the darlings of Wall Street, lost significant value. The Nasdaq Composite, heavily weighted with tech stocks, slumped by 1.9% in early trading, while the S&P 500 was down 1.5% and the Dow Jones Industrial Average dropped 1.2%4. This downturn follows a brief rally on Wednesday after President Trump announced a one-month delay in tariffs on cars and car parts from Canada and Mexico.
Semiconductor companies and their suppliers, crucial to AI infrastructure, were particularly hard hit. Marvell Technology saw its shares plummet by 20.1% despite reporting better-than-expected quarterly results and projecting significant revenue growth. Nvidia, a poster child for the AI boom, slid by 3.8%4. These declines reflect growing concerns about overvaluation and the potential impact of Chinese companies developing their own AI technologies, such as DeepSeek, which has been gaining attention for its affordable models.
The ongoing trade tensions, particularly Trump's tariffs on imports from Canada, Mexico, and China, have added to market volatility. Despite a temporary reprieve for automakers, investors remain uncertain about future tariff actions, which could exacerbate inflation and slow economic growth. Canada and China have retaliated with their own tariffs, further complicating the trade landscape.
While U.S. stocks struggled, Asian markets experienced a mixed day. Japan's Nikkei 225 rose by 0.9%, and Hong Kong's Hang Seng surged by 2%, buoyed by positive economic signals from China2. However, Taiwan's Taiex and Bangkok's SET index declined, reflecting broader global market unease.
The U.S. economy is facing challenges, with layoffs increasing and consumer spending restrained due to inflation concerns. The upcoming jobs report on Friday will be closely watched for signs of economic resilience or weakness.
Wall Street's decline is driven by a combination of factors, including the waning appeal of AI stocks and the persistent uncertainty surrounding trade policies. As investors navigate these challenges, the market's future trajectory remains uncertain.
