US tech stocks slumped on Thursday after earnings reports from industry giants raised questions about how long it will take for aggressive AI spending to pay off.
Microsoft shares fell 10%, the company’s biggest single-day plunge since March 2020, after it reported record AI spending, but slowing cloud growth. Fear is creeping back into investors’ minds that “the AI theme may not be as immediately lucrative as hoped,” one analyst said, though he cautioned that it’s far too early to declare the AI trade has peaked.
There are also rising concerns on Wall Street that “AI investments will eat the software companies’ lunches,” another strategist said. Software stocks entered bear-market territory Thursday.
Apple’s stock rose, however, on record-breaking iPhone sales.
