US tech stocks experienced a significant sell-off, particularly impacting AI-related shares, due to investor concerns over inflated valuations and potential overinvestment in the AI sector. The tech-heavy Nasdaq Composite declined, with major players like Nvidia and Microsoft facing steep drops. This downturn reflects worries that the rapid growth and investment in AI may not translate into sustainable profits, drawing comparisons to the dot-com bubble.
Broader market indices, including the S&P 500 and Dow Jones Industrial Average, also fell, signalling a wider risk-off sentiment. The decline extended to Asian and European markets, with chipmakers particularly affected. Investors are closely watching upcoming earnings reports from key companies like Nvidia to gauge the true health and potential of AI investments.
Analysts suggest that while the sell-off may present a healthy correction after months of record gains, the market is awaiting further signals, such as the US employment report, to determine the next course of action. The situation is further complicated by the Federal Reserve's cautious approach to interest rate cuts, adding to the uncertainty in the market.
