Nvidia, which somehow managed to become the world’s first $4 trillion company off the back of AI, tumbled 3.5 per cent. Palantir took a beating, dropping 9.4 per cent, while chip designer Arm was off by 5 per cent.
The Nasdaq Composite shed 1.4 per cent, its biggest single-day dive since 1 August. The S&P 500 wasn’t far behind, dipping 0.7 per cent.
The MIT report claimed “95 per cent of organisations are getting zero return” from their investments in generative AI. That nugget of reality sent a chill through the cocaine nose jobs of Wall Street.
“Just five per cent of integrated AI pilots are extracting millions in value, while the vast majority remain stuck with no measurable [profit and loss] impact,” the report claimed, confirming what most of us already suspected.
A trader from a US tech fund admitted the news was giving people the jitters. “The story is spooking people,” he said.
Even OpenAI boss Sam Altman said: “Are investors over excited? My opinion is yes. I do think some investors are likely to lose a lot of money, and I don’t want to minimise that, that sucks. There will be periods of irrational exuberance. But on the whole the value for society will be huge.”
That wasn't enough to stop the slide. Oracle and AMD, two of the best-performing large-cap stocks since May, dropped 5.9 per cent and 5.4 per cent respectively. AppLovin, which delivers ads in mobile apps, matched Oracle’s plunge.
European and Asian markets followed Wall Street’s lead. The Stoxx Europe 600 slipped 0.6 per cent, with SAP down 1 per cent, Infineon off by 1.6 per cent and ASML losing 1 per cent. Japan’s Nikkei fell 1.5 per cent and South Korea’s Kospi dropped 0.6 per cent.
Investors appear to be running for safety, rotating out of tech and into defensive plays like utilities and consumer staples. Nearly 70 per cent of the S&P 500 actually ended the day up.
Still, AI has been behind much of the recent market madness. The S&P 500’s information and tech sub-index is up 14 per cent since mid-May, driven by hopes pinned on companies like Oracle and AMD.
