AI Stock Bubble Bursts as Oil Prices Ease Further
Wall Street's appetite for AI stocks is waning, with shares of Micron Technology plummeting by nearly 10% and leading to a broader decline in the tech sector. The company's revenue more than quadrupled in the quarter ending May 28, but investors are now questioning whether this growth can be sustained.
Other chipmakers like Advanced Micro Devices and Applied Materials also fell, with SK Hynix and Samsung Electronics suffering sharp drops in South Korea's Kospi index. Analyst Jing Jie Yu of Morningstar attributed the sell-off to concerns about China's advancements in chipmaking equipment capabilities.
The losses in AI stocks are being offset by gains in other areas, such as consumer staples and industrials, with Coca-Cola and Sherwin-Williams leading the pack. The Dow Jones Industrial Average rose 567 points, or 1.1%, while the S&P 500 gained 0.3%.
Oil prices continue to ease, with Brent crude falling 4.2% to $82.24 per barrel. This is a welcome development for Treasury yields, which have dropped to 4.59% from 4.65%. The decline in oil prices has also led traders to trim their bets on an interest rate hike by the Federal Reserve.