Tech stocks tumble on concerns over AI spending

<p>Texas-based SpaceX has endured highly volatile trading session since going public on 12 June, proving just how vulnerable newly listed companies are when general tech sentiment turns sour.</p>

<p>The stock dropped past its widely watched $150 opening price early in the day. However, it managed a slight rebound to settle around $156.</p>

<p>Some optimistic traders interpreted the quick bounce as a sign of steady underlying interest in the commercial space sector.</p>

<p>Conversely, sceptics argue that these massive price swings only expose the highly speculative nature of today's market.</p>

<p>Market analysts are now split on the next move.</p>

<p>They disagree on whether this sell-off is merely a healthy, temporary pause or the start of a much larger retreat for tech investments.</p>

<p>The more optimistic view suggests that taking profits is a completely standard reaction following a historic run.</p>

<p>Bank of America's Vivek Arya supported this perspective. In a note to clients, Arya argued that the combination of sticky inflation and strengthening demand will ultimately drive sector forecasts higher.</p>

<p>According to Arya, the industry is simply transitioning from a phase where it had to defend its initial return on investment to one focused on solving physical infrastructure and power constraints.</p>

<p>However, a growing number of sceptics counter that, saying cooling corporate IT budgets and broader economic pressures mean the period of easy market gains is over.</p>

<p>Reflecting the shift, Danni Hewson, head of financial analysis at AJ Bell, noted that the relative lack of tech stocks on London markets helped the FTSE 100 stay in positive territory, even as Wall Street buckled.</p>

<p>As the trading week continues, Wall Street will be closely watching upcoming corporate earnings. That suggests tech giants must prove their massive AI investments are generating real profits rather than just marketing buzz.</p>

<h2>Related topics</h2>

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Guardian Sport · Jun 24

Guardian Sport · Jun 24

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