Has the day of reckoning finally arrived? Wednesday’s rout in tech stocks led by Tesla and Google parent Alphabet wiped a collective $1 trillion in value off U.S. equities, signaling a broad-based correction could be in store.
Losses in the benchmark S&P 500 index and tech-heavy Nasdaq Composite endured their worst days since the fourth quarter of 2022.
Chief among concerns is the fear that spending by the leading cloud computing companies, often called hyperscalers, to win the race in artificial intelligence may have gotten out of control.
“Investors realize that the payoff is going to take time to materialize and the hyperscalers’ earnings are being hurt in the short term by how much they’re spending on it,” Alec Young, chief investment strategist at Mapsignals, told Bloomberg.
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