3 Reasons Tech Investors Shouldn't Worry Too Much About Tumbling Artificial Intelligence (AI) Stocks This Week
Technology investors had gotten used to a good thing -- positive momentum that seemed unstoppable. Giants in the industry led the Nasdaq to two years of double-digit gains -- and the individual stocks themselves offered shareholders mind-boggling returns. For example, Nvidia (NASDAQ: NVDA), the world's leading artificial intelligence (AI) chip designer, saw its stock surge 1,600% over the past five years, and Palantir Technologies, an AI-driven software player, advanced more than 800% since its 2020 market debut. And that's just to mention two of the standout players. Many others also generated great gains for investors.Why such outstanding performance? Investors piled into these stocks on optimism about the future of AI, a technology that could join others like electricity or the internet on the list of "game changers." That's because AI offers the potential to save time, energy, and costs for companies -- and even lead to new discoveries.In recent weeks, though, various headwinds weighed on stocks in this dynamic field. Investors worried about U.S. export controls on chips to China, the U.S. implementation of tariffs to three major trade partners, and general uncertainty about the economy. All of this has led the Nasdaq to a decline of more than 7% over the past two weeks as some of its biggest members tumbled. But before you turn your back on the tech sector, hold on. Here are three reasons tech investors shouldn't worry too much about the recent declines in AI stocks.Continue reading
Technology investors had gotten used to a good thing -- positive momentum that seemed unstoppable. Giants in the industry led the Nasdaq to two years of double-digit gains -- and the individual stocks themselves offered shareholders mind-boggling returns. For example, Nvidia (NASDAQ: NVDA), the world's leading artificial intelligence (AI) chip designer, saw its stock surge 1,600% over the past five years, and Palantir Technologies, an AI-driven software player, advanced more than 800% since its 2020 market debut. And that's just to mention two of the standout players. Many others also generated great gains for investors.
Why such outstanding performance? Investors piled into these stocks on optimism about the future of AI, a technology that could join others like electricity or the internet on the list of "game changers." That's because AI offers the potential to save time, energy, and costs for companies -- and even lead to new discoveries.
In recent weeks, though, various headwinds weighed on stocks in this dynamic field. Investors worried about U.S. export controls on chips to China, the U.S. implementation of tariffs to three major trade partners, and general uncertainty about the economy. All of this has led the Nasdaq to a decline of more than 7% over the past two weeks as some of its biggest members tumbled. But before you turn your back on the tech sector, hold on. Here are three reasons tech investors shouldn't worry too much about the recent declines in AI stocks.
