Wall Street closes lower, weighed down by tech stocks amid AI concerns

New York's stock market ended in the red on Tuesday, dragged down by anxieties surrounding the profitability of substantial investments in artificial intelligence. This led to a wave of selling among technology stocks just before several companies in the sector were set to release their earnings.

The Dow Jones Industrial Average saw a slight dip of 0.06%, while the tech-heavy Nasdaq Composite fell by 0.90%, and the S&P 500 lost 0.49%. These movements reflect a broader market sentiment of caution, particularly concerning the high valuations and significant capital expenditure associated with AI development.

Reports indicating that OpenAI, the creator of ChatGPT, may not have met its own revenue and user growth targets have amplified these concerns. This news has reignited fears about the long-term viability of the massive spending occurring in Silicon Valley on AI. OpenAI's operations, reliant on extensive data storage and processing, are deeply integrated into the cloud ecosystem, impacting partners like Oracle and CoreWeave, which saw significant drops in their stock prices.

Industry analysts suggest that these worries provide a convenient pretext for profit-taking, especially after a period of rapid gains in many stocks, particularly in the semiconductor industry. With major tech giants like Amazon, Microsoft, Alphabet, and Meta scheduled to release their quarterly results, the market is keenly awaiting further insights into the sector's performance and the real-world impact of AI investments. Apple's results are also on the horizon.

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These concerns represent above all "a viable pretext" to sell. A large number of stocks have risen so much in such a short time, particularly many semiconductor stocks, that the mere idea" of an OpenAI stumble "was enough to justify taking profits.