Bloodbath on Wall Street as investors freak out over AI costs | Nine.com.au

Wall Street experienced its most significant decline in months, with technology stocks spearheading the downward momentum in the market. On Friday, the S&P 500 index dropped by 1.8 percent, marking the third consecutive week of losses. The tech-heavy Nasdaq composite index saw an even steeper decline, plummeting 2.8 percent.

This downturn concludes a particularly troubling October for the Nasdaq 100, which has seen over $2.84 trillion in market capitalization erased. The primary driver of these losses appears to be investor anxiety regarding expenditures on artificial intelligence (AI), which have yet to yield substantial returns for most leading firms.

Major technology companies have invested staggering amounts to develop AI capabilities, but there are growing concerns among investors that these hefty costs may not translate into sufficient profits to justify the investments. Alphabet, the parent company of Google, has emerged as the most significant casualty, suffering a loss of over a trillion dollars in value throughout the month.

Other tech giants, including Nvidia, Meta, SpaceX, and Amazon, have also reported substantial losses. In a particularly striking turn of events, social media platform Reddit experienced its worst trading day ever, shedding more than a quarter of its market value in just one day. Ironically, Reddit's decline is attributed to AI-driven changes that have diminished the site’s referral traffic from search engines.

Currently, the S&P 500 is down three percent compared to its all-time high, while the Nasdaq has fallen 7.8 percent from its peak, marking its worst monthly performance since March of the previous year. However, not all sectors of Wall Street were adversely affected; oil giants Chevron and ExxonMobil saw their stocks rise, alongside consumer goods company Colgate-Palmolive.

In the cryptocurrency market, Bitcoin experienced a significant drop following a major hack of the Binance exchange, where hackers stole $8.9 billion. North Korea is suspected to be behind this unprecedented theft, which has left crypto investors unsettled.

The timing of these Wall Street losses is particularly challenging for former President Donald Trump, as voters prepare to head to the polls for the midterm elections on Tuesday. Trump has previously highlighted the stock market's performance as a key indicator of his success during his presidency, despite a growing sentiment among voters that the financial gains have not translated into benefits for their daily lives.