ASX set to edge up, Wall Street falls as AI darlings extend slump
The S&P 500 fell 0.5 per cent and was heading for a fourth straight loss after setting an all-time high last week. The Dow Jones was down 61 points, or 0.1 per cent, in mid-afternoon trade, and the Nasdaq composite was 1 per cent lower.
The Australian sharemarket is set to advance, with futures at 4.53am AEST pointing to a rise of 13 points, or 0.2 per cent, at the open. The ASX added 0.3 per cent on Wednesday. Reporting season continues with Whitehaven Coal and Xero among those reporting. The Australian dollar was 0.3 per ent lower to US64.34¢ at 5.10am.
Nvidia, whose chips are powering much of the world's move into AI, dropped 1.4 per cent and was on track to be one of the heaviest weights on Wall Street for a second straight day following its 3.5 per cent fall on Tuesday. Palantir Technologies, another AI darling, sank 2.2 per cent to add to its 9.4 per cent loss from the day before.
Trading was shaky, and Nvidia pared a loss from earlier in the morning that got as bad as 3.9 per cent, which helped indexes also mute their losses.
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One possible contributor to the swoon was a study from MIT's Nanda Initiative that warned most corporations are not yet seeing any measurable return from their generative AI investments, according to Ulrike Hoffmann-Burchardi, global head of equities at UBS Global Wealth Management.
But the larger factor may be the criticism that such companies have been getting for a while that their stock prices simply shot too high, too fast amid the furor around AI and became too expensive. Nvidia, whose profit report scheduled for next week is one of Wall Street's next major events, had soared 35.5 per cent for the year so far heading into Tuesday. Palantir had surged even more, more than doubling.
The tech stocks still have supporters, though, who say AI will bring the next generational revolution in business.
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