AI stocks have experienced a significant decline in recent days, with the Nasdaq set to sink another 1.2% on Friday. This decline is largely due to the high valuations of AI companies, which have been built on the promise of the technology rather than actual profit growth.

Causes of the Decline

The main cause of the decline is the high cost of developing and building AI technology. Companies such as Microsoft and Meta have spent tens of billions of dollars on AI research and development, but have yet to see significant returns on their investments. This has led to a decrease in investor confidence and a subsequent decline in stock prices.

The semiconductor industry, which is crucial for the development of AI technology, has also experienced a surge in demand, leading to higher chip prices. This has further exacerbated the decline in AI stocks, as companies are struggling to keep up with the high costs of production.

Impact on the Tech Industry

The decline in AI stocks has had a significant impact on the tech industry as a whole. The Nasdaq, which is a barometer for the tech industry, has fallen more than 6% from its all-time high set on June 2. This has led to a decrease in investor confidence and a subsequent decline in stock prices across the tech sector.

However, it’s worth noting that the non-tech sectors have seen an increase in recent days, which could help to offset the decline in the tech sector. Additionally, the S&P 500 is only 3% away from its all-time high, which suggests that the overall market is still strong.

Original reporting: KTVZ (Central Oregon) — read the source article.