Artificial Intelligence Stocks Plunged, Dragging Down Global Markets

The sharp declines in the stocks of artificial intelligence-focused companies negatively affected global financial markets, particularly Wall Street. While the S&P 500 index fell by 0.4 percent, the technology-heavy Nasdaq composite index declined with a 1.2 percent loss. Even though there is a general upward trend in the stock market sector, the value losses in AI giants pressured all indices. The Dow Jones Industrial Average also pulled back 130 points from its record levels, losing 0.2 percent in value. This situation is considered a result of the correction movement in technology stocks, which are thought to be overvalued recently.

The selling pressure that started in Asian markets was triggered by the strong but not fully expectation-meeting financial results announced by the South Korean giant Samsung Electronics. Samsung announced that it expects its second-quarter operating profit to increase by approximately 1,800 percent compared to the previous year. While analysts described these figures as surprisingly good, the fact that the company's stock price had already more than doubled since the beginning of the year was not seen as sufficient for investors. Following this development, Samsung's shares plunged by 6.9 percent on the Seoul stock exchange, causing South Korea's Kospi index to drop by 4.9 percent. Japan's Nikkei 225 index also lost 2.1 percent in value.

Concerns regarding the future of investments in the artificial intelligence sector on Wall Street continue to deepen. In recent weeks, AMD shares have lost 6.5 percent in value, Intel 9.7 percent, and Micron Technology 4.7 percent. The main reason for this is the fear that artificial intelligence technologies may not yet fully cover the massive chip and data center investments in terms of productivity and profitability. Additionally, shares of Elon Musk's xAI company owner SpaceX declined by 6.8 percent in the first transactions following its addition to the Nasdaq 100 index. This picture revealed that different players in the sector face similar market risks besides the tech giants.

Significant developments also occurred outside the technology sector. Vertex Pharmaceuticals shares fell by 1.4 percent after it announced it would acquire Crinetics Pharmaceuticals for $85 per share in cash. Shares of Crinetics, which develops treatments for endocrine diseases, skyrocketed by 98.7 percent. On the other hand, electric vehicle manufacturer Rivian Automotive experienced a sharp decline of 18.1 percent after announcing it would increase its capital by issuing 75 million new shares. Such capital increases are generally viewed negatively by the market because they dilute the proportion of existing shareholders in the company.

This general fragility in the markets grew further with the impact of geopolitical tensions and rising energy prices. The British army announcing that three tankers were targeted with ammunition in the Strait of Hormuz, and the subsequent cancellation of the permit for Iranian oil sales by the US within the scope of the temporary agreement with Iran, increased oil prices. The barrel price of Brent oil rose by 3 percent to $74.16, which increased inflation pressures and drove up US Treasury bond yields. Rising energy costs and global inflation concerns since the start of the Iran war keep the risk of central banks raising interest rates on the agenda. With Germany's DAX index also declining by 1.4 percent, all world stock markets continue to be negatively affected by these economic and geopolitical uncertainties.