Tech Stocks Stumble as AI Anxiety Grips Wall Street

A wave of selling swept through U.S. markets on Thursday, with technology shares leading a sharp decline. The Dow Jones Industrial Average dropped more than 600 points, falling back below the 50,000 mark, while the Nasdaq composite lost over 1.5%. The move reflected a growing unease among investors that artificial intelligence may destabilize long-profitable business models, particularly in software.

Software companies were hit hardest. Cisco Systems saw its shares fall 11% even after reporting better-than-expected earnings. The company's cautious profit outlook for the year overshadowed its results. AppLovin, a mobile technology firm, dropped as much as 18% despite strong quarterly numbers, as the market questioned the durability of its advertising business in an AI-driven future. An exchange-traded fund tracking the software sector is now down 32% from its recent peak.

The pressure spread to larger technology firms, with Meta, Amazon, and Apple all posting notable declines. Money appeared to shift toward more traditional sectors like utilities and materials. The selloff occurred against a backdrop of mixed economic signals. A stronger-than-expected January jobs report has led many analysts to believe the Federal Reserve will maintain its current interest rate policy for longer.

Adding to the sector's challenges are new legislative efforts in Congress to regulate the substantial power consumption of AI data centers. As earnings season continues, investors are scrutinizing which companies will harness AI for growth and which may see their core businesses disrupted. The market's mood suggests a period of reassessment is underway for technology valuations after a strong start to the year.

Source: Webpronews