China’s AI drive hammers tech stocks

- Advertisement -

BOSTON/LONDON/SINGAPORE- US stock futures steadied, the dollar ticked higher and tech stocks in Asia slid on Tuesday following a wave of selling as apparent advances by a Chinese AI startup cast doubt on US dominance and spending in one of the market’s hottest sectors.

Overnight, chipmaker Nvidia dived 17 percent, wiping off nearly $593 billion in the biggest market capitalization loss in history.

“We are on the front edge of an urgent re-evaluation of a narrative that has gripped the market for almost two years. That makes it hard to shrug off after 36 hours,” said Brent Donnelly, president of trading and analytics firm Spectra Markets.

- Advertisement -

Nvidia stock was up slightly in after-hours trading. Nasdaq 100 futures rose 0.1 percent and S&P 500 futures were broadly flat.

Nvidia supplier Advantest was down 10 percent in Japan on Tuesday, taking losses for the week so far to nearly 19 percent. There were further sharp falls for AI-backer SoftBank Group down 5.5 percent, and data-center cable maker Furukawa Electric down 8 percent. Both had already fallen heavily on Monday, with SoftBank now 13 percent lower after two days and Furukawa down 20 percent.

Data center landlords tumbled in Australia. Tech heavy markets in Taiwan and South Korea were closed for a holiday.

Nvidia accounted for most of the 3 percent drop in the Nasdaq on Monday though selling extended from Tokyo to New York and hit everything with a slice of the AI supply chain, from cable makers to data centers, power utilities and software firms.

The CBOE Volatility Index known as Wall Street’s fear gauge, leapt and safe-haven assets such as government bonds, the yen and the Swiss franc all rallied.

Ten-year US Treasury yields fell 9.5 basis points, and were last steady at 4.55 percent in Asia. Fed fund futures have put in an extra 9 bps of easing by year end. Even oil prices dropped 2 percent on worries about energy demand.

Author

- Advertisement -

Share post: