Wall Street’s most valuable tech companies have lost more than $1 trillion (£760bn) since last week as fears grow that the artificial intelligence (AI) boom is running out of steam.
America’s eight largest AI-linked stocks have slumped by $1.2tn since last Friday as investor concerns mount that their sky high valuations can no longer be sustained.
US stocks are on track for their worst week since President Donald Trump rocked markets with his “Liberation Day” tariffs in April.
The sell-off came as American consumer sentiment on current economic conditions plunged by 6.3 points to hit a record low of 52.3, according to the University of Michigan’s index.
Overall confidence in the economy slumped to its lowest level in more than three years as households worried about the ongoing government shutdown, now the longest on record, and higher prices.
November sentiment dropped to 50.3, down from 53.6 in October and the lowest reading since June 2022.
In the UK, online property portal Rightmove’s shares plummeted by as much as 28pc on Friday after it unveiled plans to ramp up spending on AI, which it warned would hit profits in the near future.
It recovered from the worst of its sell-off but remained down 12.3pc by the market close – making it the worst performer across the FTSE 100 and FTSE 250.
Chip-maker Nvidia, which last month became the world’s first publicly traded company worth more than $5tn, also fell by more than 3pc on Friday while Oracle fell by 4pc.
Microsoft’s share price fell by 0.5pc, putting the software company on track for its longest streak of daily losses in 14 years.
In eight days, Microsoft shares have lost 8.6pc in value, erasing nearly $350bn in total market value.
Tesla, Amazon, Google-owner Alphabet and Apple were also nursing heavy losses.
The tech-heavy Nasdaq Composite was down by 1.8pc on Friday and was on track for a weekly loss of 5.5pc, putting it on track for its biggest loss since April.
Tech companies have led gains on US stock markets this year but are now getting hit hard by concerns that excitement around AI will not lead to significantly higher profits for the companies involved.
Traders have raised questions over whether spending earmarked by AI companies can be matched by profits or revenues.
Part of Nvidia’s recent appeal has been its $100bn deal with OpenAI, the creator of ChatGPT, which has said it plans to invest $1.4tn over the next eight years. This is far more than it has raised to date.
In August, a report by the Massachusetts Institute of Technology (MIT) triggered a tech stock sell-off after it warned that the vast majority of AI investments were yielding “zero return” for businesses.
Earlier this week, Michael Burry, the US investor who predicted the 2007 housing market crash depicted in the film The Big Short, wagered $1.1bn (£840m) betting that shares in Nvidia and software company Palantir will decline
Sam Stovall, chief investment strategist at CFRA Research, said: “There is a continuation of the concern of a possible pullback.
“It’s traditional early November weakness triggered by elevated valuations and the running out of catalysts to either support or propel the market.”
Americans are also getting increasingly worried about job losses, according to a survey from the Federal Reserve Bank of New York.
Unemployment expectations jumped for the third month in a row in October, hitting their highest level since April, when Donald Trump’s sweeping “reciprocal” tariffs triggered a wave of recession warnings.
US consumers now say there is a 43pc probability that unemployment will be higher in a year’s time.
