AI stocks falter as tech shares drop in US and Asia markets

Recent developments have highlighted a continued downturn in global financial markets, driven by a reassessment of the value of technology and AI stocks. Following a significant sell-off in the US, this trend has extended to European and Asian markets. Concerns over the profitability of investments in AI, despite the substantial recent gains, have been a key factor in this reassessment​. On Wednesday 24^th July 2024, in New York, the S&P 500 dropped 2.3%, while the Nasdaq, known for its concentration of tech stocks, fell 3.6%, marking their largest one-day losses since 2022. The Dow Jones Industrial Average also decreased by 1.2%.

These losses were largely driven by major companies such as NVIDIA, Alphabet, Microsoft, Apple, and Tesla. The tech giants have continued to face selling pressure, exacerbated by disappointing earnings reports and broader market shifts away from tech stocks​.

NVIDIA, who only recently hit new highs on the stock market, saw its shares fall by 6.8%, losing about 15% of its value over the past two weeks. The company is scheduled to report its financial results at the end of August.

Shares in Tesla, led by multi-billionaire Elon Musk, dropped by more than 12% following disappointing financial results.

Alphabet, the parent company of Google and YouTube, saw its stock price decrease by 5%. Despite reporting financial results that exceeded analysts' expectations earlier this week, the company indicated that its spending would remain high throughout 2024. Alphabet, like many of its peers, has been heavily investing in AI development and adoption.

Additionally, investors remained cautious due to uncertainties surrounding the US presidential election campaign and the timing of an anticipated interest rate cut by the US central bank.

In Asia, Japan's Nikkei index led the declines on Thursday 25th July 2025, falling by more than 3%. Chip manufacturers such as Renesas Electronics and Tokyo Electron in Japan, and South Korea's SK Hynix, were among the significant decliners.

Taiwan Semiconductor Manufacturing Company (TSMC), a major player in the AI chip market, reported a surge in profits, but this was not enough to stave off a broader market slump.

Overall, the market sentiment is cautious, with investors increasingly scrutinising the financial returns from AI and other high-tech investments, as well as monitoring broader economic signals and central bank policies.