"Real Panic": What Wall Street Is Saying About the Stock Market Crash

The U.S. stock market was hit by a sharp sell-off on Thursday following a steep rally the previous day. At the time of publication, the tech-heavy Nasdaq Composite Index was down nearly 4%, and the S&P 500 was down nearly 3%. The Dow Jones was down more than 2%.

The main reason for the sell-off was growing investor skepticism that tech companies’ massive investments in AI infrastructure would yield the expected returns. The increasing reliance on debt financing for data center construction is causing additional concerns. Investors are also concerned that Democrats in Congress and in certain states may suspend or ban the construction of new data centers. Here’s what Wall Street analysts are saying about the sell-off in AI stocks:

— “This is a real panic. It’s 100% related to chipmakers’ stocks and a potential slowdown in AI investment,” said Jay Hatfield, CEO of Infrastructure Capital Advisors, as quoted by the WSJ.

— The correction that the Nasdaq 100 index entered this week will spread to other leading stock indices, according to Steve Sosnik, chief strategist at Interactive Brokers. “There’s no doubt that the market rose too much and too quickly yesterday,” MarketWatch quotes him as saying. “Fear of missing out (FOMO) played a significant role in this move. And today, the market is simply in a really bad spot.”

— “The capital outflow from chipmakers’ stocks reflects growing concerns about the pace and funding of AI spending due to the risk of increased regulation in the sector following a Democratic victory,” Bloomberg quotes Chris Murphy, an analyst at Susquehanna International Group, as saying.

“There is now a possibility that the additional support for AI development provided by the Trump administration over the past two years may wane,” Ipek Ozkardeski, a senior analyst at Swissquote Bank, told Reuters. She also noted that the current White House administration has largely ignored a number of issues related to investment in this sector.

— “We’re seeing a shift in capital toward value stocks and dividend-paying companies,” noted Bob Edwards, CEO and Chief Investment Officer of Edwards Asset Management. “The focus on AI isn’t going anywhere, but it remains highly volatile, and investors shouldn’t lose sight of some of the less exciting segments of the market,” he told Bloomberg.

— “Continue to invest in a diversified stock portfolio,” Ulrike Hoffmann-Burkhardi of UBS Global Wealth Management advised Bloomberg. — “Strong corporate earnings, steady economic growth, and high demand for AI infrastructure continue to support our positive outlook on the market.”

This article was AI-translated and verified by a human editor