Wall Street tumbles on poor tech results

US markets had their worst day since 2022 as Tesla and AI stocks dropped

A Wall Street sign in New York City
Some investors are now moving their money away from Big Tech
(Image credit: Stan Honda / AFP via Getty Images)

What happened

U.S. stocks suffered their worst day in more than 18 months yesterday after lackluster results from Tesla and Google owner Alphabet fueled fears over the high valuations of large technology companies.

Who said what

Losses in both the S&P 500, which dropped 2.3%, and Nasdaq Composite, which fell 3.6%, were largely "driven by big tech stocks" including Nvidia, Microsoft, Apple and Tesla, said the Financial Times. Tech — and artificial intelligence stocks in particular — has "driven the bulk of market gains this year."

Tesla reporting a 45% drop in profits for the spring and Alphabet's fall of 5% could "feed concerns” that the broader market has become too reliant on the so-called "magnificent seven" technology stocks, said Charlie McElligott, an analyst at Nomura, to the Times.

What next?

Analysts have questioned whether the companies that have been responsible for the majority of the S&P 500's record run this year are now too expensive. Some investors are "moving their money away from Big Tech to smaller companies," said The Telegraph. Asian shares dropped in morning trading today.

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Arion McNicoll is a freelance writer at The Week Digital and was previously the UK website’s editor. He has also held senior editorial roles at CNN, The Times and The Sunday Times. Along with his writing work, he co-hosts “Today in History with The Retrospectors”, Rethink Audio’s flagship daily podcast, and is a regular panellist (and occasional stand-in host) on “The Week Unwrapped”. He is also a judge for The Publisher Podcast Awards.