On Tuesday, companies in the AI sector experienced a substantial decline of $190 billion in their combined stock market value.
This followed disappointing quarterly results from Microsoft, Alphabet, and Advanced Micro Devices, which failed to meet the high expectations of investors.
The sell-off highlighted the elevated anticipation created by a recent AI-driven stock market surge, propelling these companies’ shares to record highs with the promise of widespread integration of AI technology in the corporate landscape.
Alphabet saw a 5.6 per cent drop as its ad revenue for the December quarter fell short of expectations. The company also announced increased spending on data centres to support its AI initiatives, emphasizing the costs incurred in its competitive battle with AI rival Microsoft and OpenAI
While Google Cloud’s revenue growth slightly exceeded Wall Street targets, Microsoft’s Azure outpaced it in growth.
Microsoft, despite beating analyst estimates for quarterly revenue with the help of new AI features, saw a 0.7 per cent dip in its stock during extended trading, following a brief intra-day record high on Tuesday.
Despite the optimism surrounding AI boosting Microsoft’s market value to over $3 trillion this month, surpassing Apple, the stock experienced a decline.
Chipmaker Advanced Micro or AMD suffered a 6 per cent drop after its first-quarter revenue forecast missed estimates, even though it anticipated robust sales for its AI processors.
Super Micro Computer, a server maker benefiting from AI-related demand, dropped over 3 per cent after reaching a record high earlier in the day following strong quarterly results.
NVIDIA, whose shares had surged 27 per cent in January due to AI optimism, also experienced a decline of over 2 per cent in extended trade, retracting some of its earlier gains.
(With inputs from agencies)
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