Sam Altman warns of "AI bubble"... Nasdaq falls 1.46% [New York Stock Exchange Briefing]

Sell-off centered on tech stocks

NVIDIA drops 3.5%

Palantir plunges over 9%

The three major U.S. stock indices ended mixed. However, with concerns rising about a potential bubble surrounding the artificial intelligence (AI) industry, tech stocks saw widespread selling, pushing the Nasdaq Composite Index down more than 1%.

On the 19th (local time) at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 44,922.27, up 10.45 points (0.02%) from the previous session. The S&P 500 index fell by 37.78 points (0.59%) to 6,411.37, and the Nasdaq Composite closed at 21,314.95, down 314.82 points (1.46%).

Seo Sang-young, executive director at Mirae Asset Securities, said, "The U.S. market has been on an upward trend reflecting expectations of rate cuts by the Fed despite signs of economic slowdown, but dropped after projections that Fed Chair Powell would make cautious remarks at the recent Jackson Hole Conference became prominent last Friday," adding, "Additionally, when Sam Altman, CEO of OpenAI, claimed that the AI industry may be in a bubble due to excessive investment, AI-related companies' stocks also fell."

A divergence appeared between tech stocks and blue chips.

While the Dow, comprised mainly of blue-chip stocks, briefly touched an all-time intraday high and then gave up its gains to close slightly higher, tech stocks faced heavy selling and plummeted by over 300 points.

There was no specific bad news to trigger the tech stock sell-off. However, as pessimistic developments mounted around the AI industry, increasing pressure at the highs, selling sentiment was likely aggravated.

OpenAI CEO Sam Altman acknowledged in a media briefing the previous day that the AI sector may indeed be experiencing a bubble. He noted, "It's true that investors are overly excited about AI," and pointed out that "the valuations of AI companies are already out of control."

China's move to restrict the use of foreign-made chips also put downward pressure on tech stocks. According to Hong Kong-based South China Morning Post (SCMP), Chinese authorities are requiring that more than half of the computing chips used in state-owned data centers be supplied by Chinese firms.

There were also reports that NVIDIA is considering raising prices for AI chips sold to China. It is speculated to be an effort to offset the impact of U.S. government policy, which allows exports only if 15% of the sales revenue from NVIDIA's China-bound products is remitted to the U.S. government.

As tech stocks sold off across the board, all major technology companies with a market capitalization above $1 trillion saw their share prices fall.

NVIDIA slumped by 3.50%, and Broadcom fell by more than 3%. Microsoft, Amazon, and Tesla each dropped by more than 1%.

U.S. AI defense company Palantir plunged by over 9%, marking its fifth consecutive session of declines. The total drop during this period exceeds 15%.

AMD also fell 5.44%, and Arm was down 5%.

In contrast, U.S. semiconductor manufacturer Intel saw its share price surge by 7%. It was buoyed by news that Japan's SoftBank invested approximately $2 billion to acquire Intel's common stock.

Reporter Min-kyung Shin, Hankyung.com radio@hankyung.com