Tech stock selloff amid doubts over AI ROI

Investors are concerned about the massive spending by tech giants on artificial intelligence and doubt the return on these investments, leading to a massive sell-off of stocks on the US stock market.

Market indices showed significant declines: Nasdaq fell by 2.6%, S&P 500 lost 1.5%, and Dow Jones dropped by 0.7%.

A key negative factor was Intel's weak fourth-quarter forecast, which caused its shares to plummet by nearly 30%. Reports from Amazon and Alphabet also heightened concerns about shrinking free cash flow amid high costs.

The scale of decline for individual tech stocks from their peaks is as follows:

• Intel: -54%
• Amazon: -21%
• Alphabet: -31%
• Oracle: -51%
• Coinbase: -62%
• CoreWeave: -60%
• Arm Holdings: -55%
• Western Digital: -54%
• SanDisk: -49%
• Circle: -48%
• ServiceNow: -44%
• Robinhood: -44%
• Seagate: -42%
• Marvell Technology: -39%
• Super Micro Computer: -39%
• Broadcom: -34%
• AppLovin: -68%
• Adobe: -29%
• Micron: -29%
• IBM: -23%
• Meta: -21%

There are concerns that major tech companies may cut AI spending as early as 2027, negatively impacting chip manufacturers including Nvidia.

Preliminary estimates suggest that since October 6, the Nasdaq index has lost nearly $5 trillion in market capitalization.