About $1.2 trillion wiped out as US tech stocks slump over rising AI spending
New Delhi, July 28
As AI reshapes business models across the technology sector, the selloff in US technology stocks stretched into a fourth straight trading session, wiping about $1.2 trillion from the sector's market value.
Nasdaq 100 index extended its decline overnight, with Tesla leading losses after tumbling more than 16 per cent over the past four trading sessions.
Moreover, Sandisk, T-Mobile, Meta Platforms, Alphabet and Amazon fell between 7 per cent and 10 per cent over the same period, according to reports.
Investors questioned rising AI spending, weaker-than-expected earnings and higher capital expenditure plans from some of the world's biggest companies, the report added.
The tech decline also pushed Nvidia lower, allowing Apple to reclaim the title of the world's most valuable listed company for the first time since April 2025.
Nvidia shares fell 5 per cent on Monday (US time), reducing the chipmaker's market value to $4.77 trillion. This enabled Apple to finish the session ahead of Nvidia by market capitalisation.
According to reports, the latest selloff gathered pace after disappointing results from Alphabet and Tesla. Alphabet shares dropped 7 per cent after the company raised its full-year capital expenditure guidance to more than $200 billion.
Elon Musk's Tesla fell nearly 15 per cent after reporting profit that missed expectations and warning that operating expenses would increase.
The market reaction comes ahead of a key week of earnings from major global technology companies.
According to reports, investors are expected to scrutinise spending plans from Meta Platforms and Amazon, "which could shape the direction of technology shares in the coming weeks".
Alphabet, Microsoft, Amazon and Meta are likely to spend about $724 billion on capital expenditure this year and nearly $950 billion in 2027, according to reports.
— IANS
Reader Comments
Meanwhile, our Indian IT firms are still figuring out how to use AI for basic customer service. And these US giants are burning $200 billion each on capex! It's a different league altogether. But honestly, this selloff might be good for long-term investors. Buy the dip, as they say. Just don't put all your money in one basket.
As someone who works in tech, I've been saying this for months. The AI spending spree is unsustainable. These companies are like kids in a candy store, throwing money at anything with 'AI' in the name. And now the bill is coming due. Tesla dropping 16%? That's just the beginning. Wait till Meta and Amazon report their earnings next week. 🍿
Living in Bangalore and watching this from a distance, I can't help but think this is healthy correction. The valuations were insane - Nvidia at $4.77 trillion? That's larger than entire stock markets of many countries! India should learn from this - focus on building real value, not just riding the hype train. Our IT sector needs to diversify beyond just servicing these US giants.
The irony is that while US tech is bleeding, our Indian IT stocks might actually benefit in the short term as money rotates out of overvalued US names into cheaper emerging markets. But long term, this AI capex slowdown could hurt our outsourcing industry. Time to rethink our strategy, NASSCOM! 🤔
I think this is a necessary reality check. AI is revolutionary, yes, but the market got ahead of
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