On 5 November, the US stock market experienced a massive sell-off of technology shares. The Nasdaq index fell by around 5 per cent during trading, whilst the S&P 500 dropped by more than 3 per cent. The sharpest declines were seen among semiconductor manufacturers, data centre operators and companies involved in the development of artificial intelligence. The negative trend spread to the cryptocurrency market: Bitcoin fell below $77,000, triggering a wave of forced liquidations of trading positions.<\/p>\n
Trading on Thursday began with a sharp fall in the share prices of technology companies, which quickly spread to the wider stock market.<\/p>\n
During the morning session, the index Nasdaq Composite<\/a> was down by around 5 per cent, the S&P 500 by approximately 3.2 per cent, whilst the Dow Jones Industrial Average fell by more than 1,100 points.<\/p>\n For US shares, this marked a sharp reversal following the previous day\u2019s gains. On 4 November, the S&P 500 index rose by around 1.6 per cent, whilst the Dow Jones gained over 3 per cent as the US mid-term congressional elections drew to a close.<\/p>\n The sharpest fall was recorded in the semiconductor sector. AMD shares fell by around 16 per cent during trading, Nvidia<\/a> \u2014 over 8 per cent, whilst CoreWeave, which specialises in cloud computing for artificial intelligence, \u2014 nearly 15 per cent.<\/p>\n Micron, Qualcomm, Arm and other companies whose products are used in modern computing systems have also come under pressure.<\/p>\n The Philadelphia Semiconductor Index, which tracks the shares of leading semiconductor manufacturers, fell by more than 7 per cent during trading.<\/p>\n One of the factors that triggered the sell-off was the financial results and forecasts of two major chip manufacturers \u2014 Qualcomm and Arm.<\/p>\n Qualcomm has published its quarterly results, which revealed weaknesses in certain areas of its business, particularly sales of smartphone processors.<\/p>\n The company has faced a decline in demand and a reduction in revenue from its partnership with Apple. Its forecasts for future sales have fallen short of some analysts\u2019 expectations.<\/p>\n Despite earnings that exceeded some market forecasts, investors focused on the risks of a further slowdown in business. Qualcomm\u2019s shares fell by around 9 per cent during morning trading.<\/p>\n Arm, which develops processor architectures for smartphones, servers and artificial intelligence systems, also came under pressure. Its shares fell by around 11 per cent, even though the company reported a rise in quarterly revenue.<\/p>\n The market reaction points to a shift in sentiment: investors are paying ever closer attention not only to technology companies\u2019 current profits, but also to the prospects for growth in their revenues.<\/p>\n Large-scale events have become a particular cause for concern investment in data centres<\/a> and artificial intelligence infrastructure.<\/p>\n In recent years, technology companies have invested heavily in the construction of data centres, the purchase of Nvidia graphics processing units, the expansion of electricity grids and the development of cloud platforms.<\/p>\n However, the expected return on these investments remains a matter of debate amongst analysts.<\/p>\n Operators who finance the construction of data centres through borrowing face a particular risk. Delays in bringing new capacity online or a slowdown in demand could make it more difficult to service their debts.<\/p>\nQualcomm and Arm have heightened investors\u2019 concerns<\/h2>\n
Investors have doubts about the return on the multi-billion expenditure on AI<\/h2>\n