This year's stock market rally has been largely driven by technology stocks, particularly those involved in AI.
Shares of AI chip giant Nvidia, one of the main beneficiaries of the AI boom, fell 6.8%, having lost about 15% of its value over the past two weeks.
The company is expected to report financial results at the end of August.
Shares of Tesla, the electric car maker run by Elon Musk and worth billions of dollars, fell more than 12% after its latest financial results disappointed investors.
Shares of Google and YouTube parent Alphabet fell 5%. Earlier this week, the company reported financial results that beat analysts’ expectations but said it would spend more for the rest of 2024.
Alphabet, like many of its competitors, has invested billions of dollars in developing and deploying AI technologies.
“Investors are now more concerned about spending money on AI without any return benefits,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners.
“I don’t think this is the beginning of a mistrust of AI… it just means that investors will be more focused on the returns in this space rather than buying the entire sector,” she added.
Investors are also cautious amid major surprises in the U.S. presidential campaign and the timing of the U.S. central bank's rate cut.
