US tech stocks plunge as investor scramble to understand new market realities
Nvidia, which is due to report financial results next week has seen its shares soar 35.5pc since the start of this year.
Palantir had been up even more sharply, more than doubling, before this week's tumble Those increases, and big rises for some of their peers had lifted US stocks to all times highs this month, despite the uncertainties hanging over global trade as the Trump White House has torn up agreements with long time trade partners and, in more recent weeks, targeted individual companies including Nvidea, which is to pay an export tax on some sales to China, and Intel, where the US government looks set to take an equity stake.
Analysts pointed to a confluence of factors behind this week's tech stock falls, including concerns valuations had overshot, investors exiting profitable positions and a general mood of risk aversion.
Waning confidence that AI can deliver returns some investors had baked into their assumptions is also likely to be a factor, especially after Open AI's launch of ChatGPT 5 fell short of customer and investor hopes.
A study from the Massachusetts Institute of Technology's influential Nanda Initiative that found most corporations are not yet seeing any measurable return from their generative AI investments, may have spooked some investors, according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
Wariness over the implications of Donald Trump's moves into directly engaging with tech companies is also likely to be weighing on sentiment.
Analysts say the highs the market is coming off are also a factor.
"I think we were priced for perfection in the US and there was quite a lot of complacency in markets, so some summer volatility should have been expected," said Ben Laidler, head of equity strategy at Bradesco BBI.
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