#Ripple effect of #AI on #tech giants' #stock prices #investment #nasdaq #supplychain

Despite reporting strong quarterly profits, #Microsoft and #Meta have faced significant stock declines.
Microsoft shares dropped by 5.93% and Meta by 4.22% as both companies signalled substantial future spending on artificial intelligence, or AI,
and slower growth prospects.
These tech #giants, leaders in the AI sector, have heavily invested in generative AI, which had previously fuelled investor optimism.
However, the announcement of increased spending and potential growth slowdowns has led to a revaluation of their stock values.
This shift highlights the challenges these companies face in balancing investment in cutting-edge technology with the expectations of their investors, who are wary of the high costs associated with AI #development.
The downward pressure on Microsoft and Meta stocks has rippled through the broader AI #ecosystem, affecting key #semiconductor and #hardware providers.
#Nvidia, a major #player in AI technology, saw its shares fall by 4.5%.
Advanced Micro Devices, or #AMD, experienced a 2.96% drop, while Micron Technology slid by 4.22%. #Broadcom also faced a decline, with its shares down by 3.91%.
The impact of Microsoft and Meta's challenges extends beyond their own stock performance, influencing the #market perception and valuation of companies integral to the AI supply chain.
This interconnectedness underscores the broader implications of strategic decisions made by leading tech firms on the entire AI industry.
Microsoft's recent earnings report revealed a significant challenge: the inability to build data centres fast enough to meet the growing demand for AI.
Richard Windsor, founder of Radio Free Mobile, noted that this constraint has affected Microsoft's guidance for the coming quarter.
During a post-earnings call, #CEO Satya Nadella explained that external constraints, such as #third-party leasing issues, have limited their ability to fulfil AI demand.
"Data centres don’t get built overnight," Nadella stated, highlighting the logistical hurdles in scaling #infrastructure to support AI advancements.
This bottleneck has contributed to Microsoft's stock decline, as investors weigh the impact of these constraints on future growth.
Meta Platforms, the parent company of Facebook, is also navigating the complexities of AI investment.
The company has invested billions into AI to remain #competitive with its peers, known as the Magnificent 7.
CEO Mark Zuckerberg indicated that this spending will continue to grow,
with more details to be shared once the budget is finalized in the fourth quarter.
Zuckerberg emphasised the potential for AI to accelerate Meta's core business, stating, "There are a lot of new opportunities to use new AI advances to accelerate our core business that should have strong ROI over the next few years."
However, he also acknowledged the need for significant #infrastructure investment, which has contributed to the recent decline in Meta's stock.
The challenges faced by Microsoft and Meta have had a cascading effect on the #semiconductor and hardware sectors.
Nvidia, a leader in AI chip #technology, experienced a 4.5% drop in its stock value.
Similarly, Advanced Micro Devices and Micron Technology saw declines of 2.96% and 4.22%, respectively.
Broadcom's #shares fell by 3.91%, while Super Micro Computer faced a steep 11.85% decline amid an ongoing auditor dispute, risking potential delisting from the #Nasdaq.
These declines reflect the broader market's reaction to the uncertainties surrounding AI infrastructure and #investment.
As key suppliers to the AI #industry, these companies are directly impacted by the strategic decisions and challenges faced by tech giants like Microsoft and Meta.