The Nasdaq index fell 2.5 percent. Bigtech investors are worried about the payback on AI spending

U.S. stocks fell sharply in trading on January 29. The Nasdaq Composite index, dominated by technology companies, fell by 2.5%. The S&P 500 index fell by 1.5%, while the Dow Jones index fell by 0.7%.

The leader of the fall among megacaps was Microsoft - its shares collapsed by 12%, which was the strongest decline since the beginning of the 2020 pandemic. The day before, the company, a member of the "Magnificent Seven", reported a slowdown in the growth of cloud services in the past quarter and published a restrained forecast for operating margin.

Microsoft's report triggered a new wave of selloff in software developer stocks, Barron's notes. ETF iShares Expanded Tech-Software Sector ETF was losing 5.8%. Shares of Salesforce, Nvidia and Amazon also fell in price.

Investors are concerned that major companies show no signs of reducing spending on artificial intelligence, despite lingering doubts about whether demand will justify all that investment, Bloomberg notes.

"Investors are selling stocks because they've probably realized that they're not going to make as much money on the AI theme as they had hoped six months ago," Miller Tabak & Co strategist Matt Maley told the agency. - The AI theme is overloaded, and investors are reassessing their valuations of AI investments, so they are reallocating shares of major tech companies in their portfolios."

The decline in risk appetite has also affected the cryptocurrency market, with the value of bitcoin falling below $85,000.

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