A steep decline in the prices of US AI and technology stocks is testing investors’ enthusiasm to shift into other equity areas, a rotation that has propped up broader indexes in recent weeks.
\n\nDisappointing results from Alphabet, Amazon and Intel dealt the latest blow to the AI trade. Investors worry about the hefty financing needed to fund massive investment spending. They are also starting to question whether returns will be robust enough to justify that spending.
\n\nThe broader market in October held up far better than tech- and AI-exposed equities did, but it may not be able to endure a more severe pullback in the massive AI trade. The tech sector alone accounts for a 38% weight in the S&P 500.
\n\nInvestors are wary of signs that the selling will spread. A main alarm would be indications that the AI hyperscalers pull back significantly on spending plans. Their investment in data centers and other infrastructure has been a key driver for overall economic growth.
\n\n”You can have a month of a significant shift in leadership and tech weakness and relative strength in everything else,” said Mark Hackett, chief market strategist for Nationwide. However, ”if you have another month of (a…
Original source: https://www.cnbctv18.com/technology/
