Why tech stocks are getting hammered

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Tech stocks took another big hit Tuesday as investors sold off shares of companies that have powered the artificial intelligence boom.Technology companies have been spending billions of dollars investing in data centers and infrastructure needed to support the race to advance AI.But sky-high valuations and geopolitical tensions have some investors questioning whether massive AI spending will pay off, analysts said.Reflecting the unease, the tech-heavy Nasdaq composite dropped roughly 2%.

The Standard & Poor’s 500, a stock market index that tracks the performance of the largest U.S.publicly traded companies, fell by more than 1%.Share prices for major California tech companies including Nvidia, Qualcomm, Intel and Marvell Technology all dropped.

Meta Platforms, Apple, and Google’s parent company, Alphabet, also saw their stock prices slide, though the decline wasn’t as large as the drop in chip stocks.Shares of Micron Technology, a U.S.memory chip manufacturer, plunged by more than 13% a day before the company was scheduled to report its third-quarter financial results.

Anxiety in the U.S.spilled over from Asia, where South Korean tech companies SK Hynix and Samsung Electronics, both major computer memory chip manufacturers, saw their stocks plunge Tuesday by more than 12%.

“Investors are just a bit skittish after very strong moves in tech stocks where any hint of caution causes some investors to hit the sell button,” said Dan Ives, an analyst who heads technology research at Wedbush Securities, adding that it’s a “gut-check moment.”On Monday, SpaceX saw its shares plunge 16% following a record-breaking initial public offering earlier this month.Its share price then rebounded on Tuesday, closing up less than 1% to roughly $156 .

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