$1T in Tech Stocks Sold Off as Market Grows Skeptical of AI

The market’s confidence in artificial intelligence may be wavering, and companies with big investments in it seem to be shedding supporters. The Financial Times notes that, over the course of the past week, approximately $1 trillion in stock value has been wiped from several of Silicon Valley’s heaviest hitters, all of which are heavily enmeshed in generative AI. Those companies include Oracle, Meta, Palantir, and Nvidia, the outlet notes. The outlet calls it the worst week for Wall Street since Trump’s “liberation day.”

The downturn in tech stocks isn’t contained to the industry’s biggest winners. There are also companies like Sweetgreen, the salad company that has tried to position itself as an automation company that serves salads on the side. Indeed, Sweetgreen has tried to dabble in a variety of tech, including AI and robots. However, that dream seems to have died, as the company recently sold off its robotics division to Wonder and its stock has been completely wiped out over the last year.

And then there’s Microsoft, which—despite being one of the most powerful and prominent companies in Silicon Valley—seems to be having one of its biggest losing streaks ever. Bloomberg reported Friday that its stock had slumped 8.6 percent over eight days, a decline that evaporated some $350 billion in market valuation. That’s the company’s worst downturn since 2011, when the company’s stock saw losses for nine days straight, the outlet reports.

At the heart of the stock stumbles, there appears to be a growing anxiety about the AI business, which is massively expensive to operate and doesn’t appear to be paying off in any concrete way. Bloomberg notes that Wall Street may be growing wary of the vast sums of money being poured into AI (Microsoft spent nearly $35 billion in expenditures during its last quarter) while profits remain elusive. Reporting on Microsoft’s stock slump, the outlet notes:

The stock hasn’t had a positive session since it reported its quarterly results in late October. While the report featured a number of positives, including better-than-expected growth in its Azure cloud—computing business, Wall Street is growing increasingly skeptical toward the huge sums that companies are spending to build out AI infrastructure.

At the same time, the tech slumps may be part of an overall shit-sandwich of an economy, with many available indicators (official economic data isn’t currently available due to the government shutdown) seeming to paint an increasingly dire picture. Indeed, a recent report from career transition services firm Challenger, Gray & Christmas showed that job losses last month were the worst for October since 2003. Tech led those losses, with Amazon alone shedding some 14,000 jobs, the report showed.

Want more evidence that our economy is currently a dumpster fire? A monthly survey from the University of Michigan has shown that consumer sentiment is currently hitting some of its lowest numbers in the history of the survey. “With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” Joanne Hsu, the survey’s director, has said. “This month’s decline in sentiment was widespread throughout the population, seen across age, income, and political affiliation,” she added.

In other words, we’re in the middle of the “greatest economy” ever. Yes, welcome to the new “Golden Age”, where the jobs are few and far between, everything is expensive, and there’s fear in the air! What a great place to be.