Wall Street’s most valuable tech companies have lost more than £760 billion since last week as fears grow that the artificial intelligence (AI) boom is running out of steam. America’s eight largest AI-linked stocks have slumped by £920 billion since last Friday as investor concerns mount that their sky-high valuations can no longer be sustained.
The sell-off came as American consumer sentiment on current economic conditions plunged by 6.3 points to hit a record low of 52.3, according to the University of Michigan’s index. Overall confidence in the economy slumped to its lowest level in more than three years as households worried about the ongoing government shutdown, now the longest on record, and higher prices.
In the UK, online property portal Rightmove’s shares plummeted by as much as 28% on Friday after it unveiled plans to ramp up spending on AI, which it warned would hit profits in the near future. It recovered from the worst of its sell-off but remained down 12.3% by the market close – making it the worst performer across the FTSE 100 and FTSE 250.
Chip-maker Nvidia, which last month became the world’s first publicly traded company worth more than £3.8 trillion, also fell by more than 3% on Friday while Oracle fell by 4%. Microsoft’s share price fell by 0.5%, putting the software company on track for its longest streak of daily losses in 14 years. In eight days, Microsoft shares have lost 8.6% in value, erasing nearly £265 billion in total market value.
Tesla, Amazon, Google-owner Alphabet and Apple were also nursing heavy losses. The tech-heavy Nasdaq Composite was down by 1.8% on Friday and was on track for a weekly loss of 5.5%, putting it on track for its biggest loss since April.
Tech companies have led gains on US stock markets this year but are now getting hit hard by concerns that excitement around AI will not lead to significantly higher profits for the companies involved. Traders have raised questions over whether spending earmarked by AI companies can be matched by profits or revenue.