Shares drop in US, Asia amid tech sell off

The S&P 500 declined 2.3% and the tech-heavy Nasdaq dropped 3.6%, in their biggest one-day falls since 2022, the Dow Jones Industrial Average declined by 1.2%, while the Nikkei index led declines in Asia as it dropped by 3%

Financial markets in the US and Asia have dropped sharply as investors sell off shares in technology companies, with AI stocks hit particularly hard.

In Wednesday's trading in New York, the S&P 500 declined 2.3% and the tech-heavy Nasdaq dropped 3.6%, in their biggest one-day falls since 2022. The Dow Jones Industrial Average declined by 1.2%.

The losses were driven by major firms including Nvidia, Alphabet, Microsoft, Apple and Tesla.

On Thursday, Japan's Nikkei index led declines in Asia as it dropped by 3%.

Shares in technology firms, especially those related to artificial intelligence, have driven much of this year's stock market gains.

AI chip giant Nvidia, which has been one of the main beneficiaries of the AI boom, saw its shares decline 6.8%. It has shed nearly 15% of its value in the past two weeks.

The firm is set to report financial results at the end of August.

Shares in electric car maker Tesla skidded more than 12% after its latest financial results disappointed investors.

Google and YouTube parent company Alphabet's stock price was down 5%. Earlier this week, the company reported financial results that beat analyst expectations but said its spending would stay high for the rest of 2024.

Alphabet, like many of its rivals, has been investing billions of dollars into the development and adoption of AI technology.

In Asia, chip makers Renesas Electronics and Tokyo Electron in Japan and South Korea's SK Hynix were amongst the big decliners.

Investors are now becoming more concerned about all this expenditure with artificial intelligence without the revenue benefit, said Jun Bei Liu, Portfolio Manager at Tribeca Investment Partners.

I do not think this will mark the start of the disbelief in AI. It just simply means investors will focus more on returns in this space than just buying the whole sector, she said.