Tech Tumbles

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Koushik Korampalli

June 28, 2024

Written by Koushik Korampalli

Est read: 1 minute

On Wednesday US stocks faced their worst day since 2022 following disappointing stock performances from a variety of companies
- S&P 500 fell 2.4%
- Nasdaq composite fell 3.6%
Tesla announced their disappointing second quarter results
- Tesla’s stock fell 12.3%
- Their operating expenses rose 39% over the quarter
- Their deliveries rebounded heavily from last quarter (see edition 13) but is still down 4.7% YoY
- Tesla delayed the release of their autonomous taxi service, ‘robofleet’, which Elon claims will multiply the company’s value 6 fold.
- Elon stated that new entrants into the market with lower prices has caused tesla to struggle
- He also stated that they are investing a significant amount in new products and investments, aiming to release a new affordable model in the first half of 2025
Elon’s endorsement of Trump and the far right is also causing some investors to fall back on their support of Tesla
Other tech firms also suffered, arguably due to Googles increased spending (specifically on AI) being used as an indicator for the rest of the industry
- Alphabet fell 5%
- Nvidia fell 6.8%
- Meta fell 5.6%
- Microsoft fell 3.6%
- Apple fell 2.9%
International Tech firms also felt the heat
- Dutch ASML down 4%
- Germany’s Infineon Technologies down 7%
- Switzerland’s STMicroelectronics 13.7%
Many investors are questions how much spending should be going into AI and whether results will be as outstanding as companies claim
- The AI craze has caused large amounts of spending into AI
- Elon announced on Thursday announced a potential $5bn into his AI startup xAI
  - This is despite poor results for the past 4 quarters
- Alphabet reported spending $2.2bn on AI
  - This is up 100% YoY
  - The CFO predicted around $12bn of spending per quarter in 2024
- Meta in the previous quarter announced that their yearly earnings outlook was up to $35-40bn from $30-37bn
  - This was largely due to their investment into the AI space with new language development
  - They predicted to spend $10bn this quarter in AI alone
- Microsoft spent $14bn in Q1 once again mainly due to AI
Is AI really as profitable and innovate as claims say? Or is it another bubble waiting to burst
Next week we will see results from Meta, Amazon and Apple

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