Meta also "thundered", causing tech stock investors to "break through the defense"
The sharp decline in Meta has raised investors' doubts about the profitability of AI, as well as concerns about the overall technology sector. Some analysts have expressed that "Meta's revenue outlook falling short of expectations has dimmed any optimistic expectations about AI."
One of the leading AI companies, Meta, had a "poor start" in its financial report, triggering investors' panic about tech stocks.
On Wednesday local time, Meta's first-quarter report exceeded expectations, but its revenue outlook for the second quarter was lower than expected, while planning to significantly increase AI spending, causing the stock price to plummet nearly 20% after hours.
Meta's sharp decline has raised doubts among investors about the profitability of AI and concerns about the overall technology sector, with the tracking index fund of the Nasdaq 100, Invesco NASDAQ 100 ETF (QQQM), falling more than 1% after hours.
According to the media, Jack Ablin, Chief Investment Officer of Cresset Wealth Advisors, stated that although Meta will use AI in its business, it is not currently the biggest beneficiary of the AI application wave:
"The lower-than-expected revenue outlook has dimmed any optimistic expectations about AI. The specific content that users benefit from is not yet clear, although AI may eventually bring some cost savings, it is not obvious at the moment."
Google and Microsoft, which are set to release their financial reports on Thursday, both saw their stock prices decline after hours, with Google's parent company Alphabet falling over 3% after hours, and Microsoft dropping nearly 2%. Social media companies Snap Inc and Pinterest Inc, which are in the same category as Meta, both fell by over 6%.
As the biggest beneficiary of AI spending, NVIDIA's stock price also declined, falling 3.33% during trading hours and further dropping 1.7% after hours. Other chip manufacturers such as Micron Technology and AMD fell over 1% after hours, while server manufacturers AMD and Dell both fell by over 3%.
Other tech stocks were not spared either. IBM plummeted over 8% after hours, despite reporting first-quarter earnings exceeding expectations but slightly lower than expected sales. Software manufacturer ServiceNow fell over 5% after hours, with its first-quarter earnings strong but performance guidance slightly below expectations