Clear climate around AI has changed – but unclear if this is removing market froth or a deeper malaisepublished at 11:25 GMT
Theo Leggett
International business correspondent
It’s worth putting the recent market falls into context.
The Nasdaq Composite index in the US is primarily focused on technology stocks. It’s where you’ll find listings for industry titans like Apple, Alphabet, Microsoft, Meta and Nvidia.
Because they have such huge valuations, the fortunes of these massive corporations steer the entire index. On Thursday, it fell 5.5%. That took its losses for the last month to nearly 12%.
But here’s the rub. The index as a whole is still up 4.6% since the start of the year. It has risen by more than 50% over the past five years.
This reflects the sheer amount of money that has already gone into the industry, much of it prompted by the modern-day gold rush into artificial intelligence (AI), and fuelled by a sizeable dose of investor FOMO – fear of missing out.
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It’s pretty clear the climate surrounding AI has changed markedly in recent weeks, with exuberance being tempered by fears of more regulation, growing concerns about safety and serious questions being raised about whether the huge planned investments in AI will ever generate sufficient returns.
Investors buy shares in companies which they think will make money, or which will increase in value. The sell-off suggests falling confidence that the industry can keep its promises.
But it’s not yet clear whether it amounts simply to the removal of market froth, or a symptom of a much deeper malaise.
