AI stock selloffs fuel fears Big Techs best quarters are over

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Set us as preferred Many of the top technology stocks, which seemed almost unstoppable for months, got hammered this week as fears grew that massive spending on artificial intelligence won’t pay off anytime soon.Some investors have expressed concerns that the AI rally has inflated some shares too much.

Hundreds of billions of dollars are being spent on data centers and the research to build and test the powerful large language models behind AI, but it remains uncertain whether future profits will justify the investment.Companies have yet to prove they have enough customers for the technology and, at the same time, have expressed the need to slow down the pace of development to ensure it can be safely managed.

The latest quarterly results confirmed many concerns: While high AI profits are still far off, much more spending is still required.Many investors have taken this moment to sell some of their tech shares as they wait for a clearer outlook on profits and spending.

Meanwhile, many tech companies are realizing that AI is hurting their business as their customers switch to AI options.“The disruption caused by AI is on full display during tech earnings and the uncertainty around which names and sectors will be the disruptors vs the disrupted,” said Dan Ives, partner and senior managing director at Yorkville Ives, in a note Friday.The Nasdaq 100 index plunged roughly 4%, wiping out more than $1 trillion in value.

The S&P 500 dropped more than 2% on Friday afternoon.The market is “a lot more sensitive than it might normally be,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management, adding that investors would rather sell first and ask questions later rather than get stuck nursing further losses.Strategists from Wells Fargo to Franklin Templeton were among those in recent weeks predicti...