NEW YORK — U.S. technology stocks, particularly those tied to artificial intelligence, declined sharply this week, raising questions among investors about the sustainability of recent gains in the sector.
The tech-heavy Nasdaq Composite fell about 2.2% on Tuesday, extending losses from the previous session, according to market reports. The S&P 500 also declined, while shares of major AI-related companies such as Nvidia dropped more than 3-4%. Broadcom and other semiconductor firms saw similar or steeper declines.
The moves come amid broader concerns over high valuations in the AI space and the costs associated with heavy investments in the technology. Investors have scrutinized whether expected profits from AI will materialize quickly enough to justify current stock prices, market participants said.
Semiconductor companies, which have benefited significantly from demand for AI chips, were among the hardest hit. Nvidia, a leader in the sector with a market value that recently approached $4.9 trillion at peaks, faced selling pressure. Other names including Micron Technology and Intel also posted notable losses.
The selloff reflects ongoing debate about the pace of AI adoption and returns on substantial capital expenditures by major technology firms. Some companies have turned to debt financing for AI infrastructure, adding to scrutiny, analysts have noted in recent coverage.
"This volatility indicates that there's multiple opinions battling it out in the marketplace," a J.P. Morgan researcher said in comments on AI stock movements earlier in the year, highlighting persistent uncertainty.
The AI boom has driven strong performance in a small group of large technology companies over the past few years, contributing to market concentration. However, not all sectors have benefited equally, with some software stocks lagging.
Trading on Wednesday continued to show pressure in the sector, though broader market indexes remained near levels seen in recent months. Details on the full extent of Tuesday's session losses and any immediate recovery varied across reports.
Market participants continue to monitor upcoming earnings and economic data for further signals on AI spending and corporate profitability. No single event appeared to trigger the latest decline, according to available reports, with factors including valuation concerns and global market ripples cited.
The latest status of major indexes showed the Nasdaq and S&P 500 off recent highs but without indications of a broader shift away from technology themes, traders said.
