[New York Stock Market Briefing] New York stocks close mixed amid big tech AI chip depreciation controversy

Korea Economic Daily

Summary

The New York market reported that the three major indexes closed mixed amid AI bubble concerns and a debate over AI chip depreciation.
It said worries that the useful life of AI chips at major tech companies could be shorter than expected could affect companies' earnings, corporate bond yields, and stock prices.
Major tech names such as Tesla, NVIDIA, Palantir, and Microsoft saw strength from bargain buying, and Alphabet also showed after-hours strength on news that Berkshire Hathaway held a stake.

Concerns about an artificial intelligence (AI) bubble and bargain buying competed, leaving the three major U.S. stock indexes to finish mixed.

On the 14th (U.S. Eastern Time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 47,147.48, down 309.74 points (0.65%) from the previous session.

The Standard & Poor's (S&P) 500 fell 3.38 points (0.05%) to 6,734.11, while the Nasdaq Composite rose 30.23 points (0.13%) to 22,900.59.

From the start of trading, concerns about an AI bubble and a depreciation debate surrounding AI capital expenditures spread unease through the market, and as risk aversion widened, all three major indexes opened lower.

Major hyperscalers (technology infrastructure investors) such as Google, Microsoft (MS), and Oracle estimate that NVIDIA's AI chips and servers can be used for up to six years. However, many observers believe they could depreciate much sooner in reality.

In its recent annual report, MS listed the minimum useful life of its computer equipment at two years, much shorter than six years. If AI chips depreciate faster than expected, companies' earnings forecasts, corporate bond yields, and stock prices would all need to be reassessed.

Michael Burry, the real-life model from the movie 'The Big Short,' fanned the depreciation debate, and related articles and analysis reports have been pouring in on Wall Street.

However, as indexes plunged, bargain buying concentrated in tech stocks flowed in strongly, increasing volatility. Investors judged that the sell-off triggered by AI bubble concerns was excessive.

Tesla rose $2.36 (0.59%) to $404.35, NVIDIA climbed $3.31 (1.77%) to $190.17. Palantir rose $1.87 (1.09%) to $174.01, and Microsoft (MS) jumped $6.89 (1.37%) to $510.18.

Alphabet fell $2.14 (0.77%) to $276.98 but showed strength in after-hours trading after it was confirmed that Warren Buffett's Berkshire Hathaway held $4.3 billion worth of Alphabet shares as of the end of the third quarter.

O Se-sung, Hankyung.com reporter sesung@hankyung.com