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CNN
14 minutes ago
- CNN
AI and tech stocks slide as summer rally peters out
Tech stocks were under pressure this week as Wall Street's AI enthusiasm slowed and investors adjusted portfolios after a strong summer rally. The Nasdaq Composite fell 0.67% on Wednesday after sliding 1.46% on Tuesday. The tech-heavy index was on track to snap back-to-back weeks of gains. Meanwhile, the broader S&P 500 fell 0.24% and posted its fourth day of losses in a row. The Dow hovered around the flatline. Tech stocks had steadily rallied in recent months, lifting the S&P 500 and Nasdaq to a streak of record highs. Now Wall Street is taking a breather while optimism about the AI boom is facing some friction. Palantir (PLTR), a star of the AI trade, fell 1.1% on Wednesday after falling 9.35% on Tuesday. Meanwhile, Nvidia (NVDA) edged lower by 0.14% on Wednesday after sliding 3.5% on Tuesday. 'Investors rotated out of high-momentum tech stocks, reflecting renewed jitters over the sustainability of the AI trade,' Ulrike Hoffmann-Buchardi, head of global equities at UBS, said in a note. Investors are also in wait-and-see mode ahead of a critical day for markets on Friday when Federal Reserve Chair Jerome Powell is set to deliver remarks at the Jackson Hole Economic Symposium. 'It's just a pause that may refresh as investors retrench and rethink how they want to position their tech dollars,' Rob Haworth, senior investment strategy director at US Bank Asset Management Group, told CNN. Powell's closely watched speech on Friday could provide signals about the Fed's potential rate-cutting path and comes at a key inflection points for markets after past months' ascent to record highs. Excitement about AI propelled markets higher in recent months, boosted by robust corporate earnings and enormous spending by companies like Meta and Microsoft. But Wall Street's eagerness was tested this week after Sam Altman, chief executive at OpenAI, said he thinks the market might be in a bubble. 'Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes,' Altman told reporters last week, according to The Verge. The OpenAI chief also said he thinks AI will provide value for the economy. 'Is AI the most important thing to happen in a very long time? My opinion is also yes,' he said. Also, researchers at MIT on Monday published a report detailing how the majority of companies testing new generative AI tools are seeing zero returns. While there was not an explicit catalyst for the decline of tech and AI stocks decline this week, investors said Altman's comments and the MIT report could be contributing to negative momentum. AI chip and semiconductor companies Advanced Micro Devices (AMD) and Marvell Technology (MRVL) were each down almost 7% this week. 'Altman's comments spooked some people when he talked about the AI bubble,' Dan Ives, head of global technology research at Wedbush Securities, told CNN. 'Tech stocks have had a massive run, so I think it's just typical that investors are starting to take some chips off the table going into Labor Day,' Ives said. 'But I believe it's going to be short lived.' Each of the Magnificent Seven tech stocks — Apple (AAPL), Alphabet (GOOGL), Amazon (AMZN), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) — fell on both Tuesday and Wednesday, dragging down the broader market. As of Tuesday, they made up 33.5% of the S&P 500's total market value, according to S&P Dow Jones Indices, reflecting their outsized influence on the index's performance. 'Stocks have been on an absolute tear. Valuations have sprinted up,' said Ross Mayfield, an investment strategist at Baird. 'The fundamentals are good but not keeping pace with the price action.' 'I think along the way we'll see pockets of profit taking, even if it doesn't mark the end of the bull market in general,' Mayfield said. While tech dragged on the market, about 70% of stocks in the S&P 500 had closed higher on Tuesday, UBS' Hoffmann-Buchardi said. Sectors that outperformed included consumer staples, utilities and real estate. It's a sign that investors are shifting out of Big Tech and AI-related trades and toward more defensive stocks as they reassess the markets. Nvidia as of Monday had surged 93% since a low point in early April. 'We've been expecting this type of a pullback,' said Jay Hatfield, chief executive at Infrastructure Capital Advisors, who said he has taken down his exposure to tech in recent months. It's also the start of a historically weak season for stocks, Hatfield said. 'We're neutral on the market right now, but still really bullish for year end.' Palantir is still up 106% this year. But shares in Palantir are down six days in a row and had dropped as much as 9.8% on Wednesday before paring losses, reflecting the volatility in AI stocks. 'Now we're getting the downward momentum,' Hatfield said. 'Palantir is like the poster child for excessive valuation, and those investors are learning that the momentum works in both directions.'
Yahoo
25 minutes ago
- Yahoo
Sirius XM, Lovesac, Rogers, Tandem Diabetes, and Altice Shares Are Falling, What You Need To Know
What Happened? A number of stocks fell in the afternoon session after the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed. Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap." Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation. The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Among others, the following stocks were impacted: Wireless, Cable and Satellite company Sirius XM (NASDAQ:SIRI) fell 3.7%. Is now the time to buy Sirius XM? Access our full analysis report here, it's free. Home Furnishings company Lovesac (NASDAQ:LOVE) fell 4.1%. Is now the time to buy Lovesac? Access our full analysis report here, it's free. Electronic Components & Manufacturing company Rogers (NYSE:ROG) fell 4.2%. Is now the time to buy Rogers? Access our full analysis report here, it's free. Healthcare Technology for Patients company Tandem Diabetes (NASDAQ:TNDM) fell 5.5%. Is now the time to buy Tandem Diabetes? Access our full analysis report here, it's free. Wireless, Cable and Satellite company Altice (NYSE:ATUS) fell 4.9%. Is now the time to buy Altice? Access our full analysis report here, it's free. Zooming In On Tandem Diabetes (TNDM) Tandem Diabetes's shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 7 days ago when the stock gained 3.2% on the news that markets continued to rally amid growing speculation of an impending interest rate cut by the Federal Reserve. Following a favorable Consumer Price Index (CPI) report, investors are increasingly betting on a rate reduction next month, a sentiment amplified by U.S. Treasury Secretary Scott Bessent's call for a significant cut. This has fueled a 'risk-on' environment across Wall Street. Lower interest rates are typically beneficial for growth-oriented sectors like healthcare, as they reduce the cost of borrowing for research and innovation and increase the present value of future earnings. Tandem Diabetes is down 70.9% since the beginning of the year, and at $10.42 per share, it is trading 77.1% below its 52-week high of $45.57 from August 2024. Investors who bought $1,000 worth of Tandem Diabetes's shares 5 years ago would now be looking at an investment worth $94.78. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next. Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Miami Herald
an hour ago
- Miami Herald
Trump targets corporate America to achieve economic and foreign policy goals
He didn't campaign on it. It wasn't even broached during his first administration. He criticized his predecessor for it. But this month President Donald Trump made clear that he's willing to use the full force of the US government to directly intervene in corporate matters to achieve his economic and foreign policy goals. Trump, backed by his team of Wall Street financiers, took the unprecedented step of seeking to collect a portion of money generated from sales of AI chips to China by Nvidia Corp. and Advanced Micro Devices Inc. And in a move that could see the US government become Intel Corp.'s largest shareholder, the administration is said to be in talks for taking a 10% stake in the beleaguered chipmaker. Last month, the Pentagon also decided to take a $400 million preferred equity stake in a little-known rare earth mining company. It's a series of moves that has surprised Wall Street and Washington policy veterans, who privately and publicly acknowledged they've never seen anything like it in their decades-long careers. The actions, if successful, could leave private investors and average 401(k) savings holders enriched while catapulting US national security further ahead of China. But they're also risky bets that could end with taxpayer losses and distort markets in ways investors can't predict. "I'm very concerned that we're going to have these rolling sectors where the president starts saying 'you have to pay us just to sell internationally,'" Lee Munson, the chief investment officer at Portfolio Wealth Advisors, with $390 million in assets under management, said. "Where does this end? I don't even know how to buy companies right now that have exposure to China that have high-tech IP." The Trump administration's direct involvement in corporate matters is becoming a marker of the president's second term. Trump, a self-described dealmaker, has a mixed track record of success yet has vowed to bring more of a business approach to governing in Washington. In addition to the Nvidia and AMD revenue promise and potential Intel investment stake, his administration secured the "Golden Share" from Nippon Steel Corp., a Japanese steelmaker that gives Trump personal power to make decisions on United States Steel Corp. corporate decisions. In these cases, the administration is picking winners and losers, and risks undermining the free flow of capital. "The Trump administration's focus on industries like steel, semiconductors, and critical minerals is not arbitrary – these sectors are critical to our national and economic security," White House spokesman Kush Desai said in an emailed statement. "Cooled inflation, trillions in new investments, historic trade deals, and hundreds of billions in tariff revenue prove how President Trump's hands-on leadership is paving the way towards a new Golden Age for America." Trump surprised markets earlier this month when he announced Nvidia and AMD agreed to pay the US government 15% of their revenue from AI chip sales to China. The move rankled investors, trade experts, lawmakers and others who feared a much broader slippery slope in which the federal government could begin forcing pay-for-play scenarios in everything from trade negotiations to defense contracts. Word that the White House is contemplating using Chips Act money to take a direct stake in chip-maker Intel added to the uncertainty around changing norms between private sector companies and the US government. The move could provide a much-needed boost to Intel's ambitious plan for a sparkling new chips facility in Ohio, which is vital to rebuilding domestic chip production in the US but which has been delayed amid shrinking sales and mounting losses at the company. SoftBank Group Corp. agreed this week to buy $2 billion of Intel stock in a surprise deal. 'Chinese model' In America's free market economy, the government typically doesn't buy stakes in companies. There are exceptions, of course, such as during the financial crisis of 2008-2009, when it stepped in to support major names like Citigroup Inc., American International Group Inc. and General Motors Co. While Intel has performance issues to grapple with, it isn't facing the imminent threat of collapse. That's in part why investors, lawmakers, national security experts and others interviewed repeatedly referred to "uncertainty" and "uncharted territory" when asked to contemplate the risks associated with Trump's new policies. "It's state direction that we haven't had in the US, it's very much the Chinese model making its way into US government," Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said. The Trump administration's approach to public companies in the first year of his second term is in some ways an evolution of the economic statecraft tools he deployed in his first four years as president. Back then he deployed trade levers that hadn't been used in years or decades, from Section 301 tariffs on entire countries, like China, to Section 232 tariffs on sectors like steel and automobiles. The policies weren't popular and they rattled markets, but supporters argued that the tariffs tamped down Chinese and other foreign products that flooded the US market and drove some American companies out of business. Trump has continued to push the boundaries of using novel tools in his second administration. "What we see here is when it comes to big economic questions like tariffs and fees for exports and also the MP Materials deal, he is willing to push legal boundaries on big economic issues in a way that he wasn't in the first term," said Peter Harrell, a nonresident scholar for the American Statecraft Program at the Carnegie Endowment for International Peace. Caitlin Legacki, a former Commerce Department official in the Biden administration, said an argument in favor of "national champions" is understandable, however a "lack of transparency" around the deals in concerning. "Instead of making this a cause for national security or technological independence that people from both parties can rally around, it feels more like a shakedown," she said. (With assistance from Josh Wingrove and Ryan Gould.) Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
