Calls for a
development sparked a global sell-off in technology stocks on Monday, as investors fretted over the sustainability of spending in a sector that has driven financial markets to record highs.
asserted
that → spark → highs
The tech-heavy Nasdaq Composite Index fell 147 points, or 0.6%, to close at 26,186.
asserted
Index → fall → 26,186
The S&P 500 and blue-chip Dow Jones Industrial Average dropped 0.5% and 0.3%, respectively.
asserted
S&P → drop → ?
Shares of chipmakers Nvidia and Micron Technology, which both produce advanced semiconductors used in AI infrastructure, slid 3.4% and 5.3%, respectively, on the day.
asserted
which → produce → day
Adam Crisafulli, head of investment advisory firm Vital Knowledge, said "pick and shovel" stocks, which represent companies that supply AI infrastructure and resources, were hit hardest during early trading.
asserted
that → say → trading
"Markets are trying to figure out what the pace [of AI development] is, and there will be winners and losers depending on what that pace is," David Royal, chief financial and investment officer at financial services provider Thrivent, told CBS News.
asserted
Royal → try → News
"I'm not too alarmed by what we're seeing today, but you are seeing some individual names in the chip space that are getting hit pretty hard," he added.
asserted
he → see → space
Investors are reacting to comments from leaders of major AI companies who said the industry should proceed more cautiously in developing AI to guard against potential risks, Wall Street analysts said.
asserted
analysts → react → risks
The warnings intensified after Anthropic CEO Dario Amodei published an essay over the weekend calling for the industry to "pace the frontier."
asserted
industry → intensify → frontier
"For too long the industry lied" about AI risks, Amodei
senior business and technology correspondent Jo Ling Kent in an interview.
asserted
industry → lie → interview
Elon Musk, CEO of SpaceX, which owns xAI, and Sam Altman, CEO of OpenAI, echoed Amodei's calls for a slowdown.
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which → own → slowdown
Is the AI bubble hissing air?
asserted
bubble → hiss → air
Investments in AI have been the main growth engine for the stock market, helping it notch a succession of record highs.
asserted
it → help → highs
Now, investors worry that billions of dollars in AI capital expenditures will outpace corporate profits, leading to a stock downturn.
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billions → worry → downturn
Stock market performance has become increasingly concentrated in a handful of tech companies, with any major tech sell-off threatening to hurt investors and drag down Americans' 401(k) plans.
asserted
off → become → plans
According to Bank of America Global Research, five stocks — Alphabet, Apple, Micron Technology, Microsoft and Nvidia — will account for 27% of S&P 500 growth over the next 12 months.
uncertain
stocks → accord → months
As a whole, tech stocks will account for 50% of that earnings growth, the firm predicts.
asserted
firm → account → growth
Some Wall Street analysts think the AI-fueled market rally has more room to run in the near term, but faces mounting risks in the long term.
asserted
rally → think → term
Investment adviser Capital Economics forecasts the S&P 500 to hit 8,250 by year-end.
asserted
S&P → forecast → end
But the firm also expects what many
to burst next year, leading to a more than 20% drop in the S&P 500 by the end of 2027.Crisafulli said he is concerned about the pace of AI spending.
asserted
he → expect → spending
However, if we do see a sharp slowdown in AI CapEx, it won't necessarily lead to a complete market downturn, he added.
asserted
he → see → downturn
"I think it's more nuanced than just bubble, no bubble," he said.
asserted
he → think → bubble
"This pace of spending is absolutely not sustainable.
asserted
pace → spend → spending
But that doesn't mean everything that is associated with AI has to suffer as a result."
asserted
that → mean → result
The Aporia
