U.S. stock markets saw mixed results in Tuesday’s (October 20) trading session, as selling pressure returned to technology stocks linked to artificial intelligence (AI). The Nasdaq Composite index fell 0.9%, while the S&P 500 declined 0.3%. In contrast, the Dow Jones Industrial Average rose 229 points, or 0.4%, bolstered by gains in healthcare stocks such as Johnson & Johnson and Merck. These movements reflect a growing selectivity among investors as they navigate uncertainty regarding the outlook for the technology sector.
Selling pressure hit several semiconductor and AI infrastructure companies. Shares of Micron Technology, Intel, and SanDisk each fell by approximately 2%, while Seagate Technology and Advanced Micro Devices (AMD) dropped more than 1%. Shares of CoreWeave also slid by over 3%, highlighting market concerns regarding the substantial capital required to develop AI infrastructure. Negative sentiment was further compounded by the performance of South Korean tech firm Elice, which plunged more than 30% during its stock market debut.
This downturn follows a brief recovery on Wall Street during Monday’s session, when the Nasdaq climbed over 1% and the S&P 500 rose 0.4%. However, concerns surrounding the high debt levels of tech companies, the steep costs of building data centers, and uncertainty regarding the return on AI investments have once again cast a shadow over the market. The pressure also extended to the Asia-Pacific region, with South Korea’s KOSPI index tumbling 3.73%, Japan’s Nikkei 225 falling 1.3%, and Australia’s S&P/ASX 200 declining 0.33%.
Pasar observes that the pressure on technology stocks reflects growing investor skepticism regarding the sustainability of growth in the AI industry—particularly among companies that rely on debt financing for business expansion. Should concerns over funding costs and profitability continue to mount, the Nasdaq could face further pressure, potentially triggering a risk-averse sentiment across global stock markets. Conversely, robust financial reports from tech companies, coupled with evidence of revenue growth driven by AI investments, could serve as a catalyst for restoring investor confidence.