NASDAQ Hits a Bump: AI Sector Profit-Taking Takes Over
Tech Sector Profit-Taking Curbs Nasdaq Rise
The tech sector is seeing a bit of a rough patch on Wall Street, and the Nasdaq is feeling the heat. After a recent rally, the tech-heavy index is taking a slight downturn, and it's all down to profit-taking in the AI sector.
On Thursday, the Dow Jones Industrial Average gained 0.7 percent to 42,323 points, with the S&P 500 adding 0.4 percent to 5,917. However, the Nasdaq lost 0.2 percent to 19,112 points. Although the easing of U.S.-China trade tensions has euphoria written all over Wall Street, the trade story ain't over yet. Tariffs still loom large, dampening sentiment in the industry, according to Ellen Zentner, chief U.S. economist at Morgan Stanley.
Walmart Warns of Price Increases; Stock Drops
U.S. production remained unchanged in April, but the retail sector performed better than expected, with revenues up 0.1 percent from the previous month. While Walmart's quarterly results were better than expected, the company warned of potential price increases, and its stock dropped 0.5 percent.
Meanwhile, Foot Locker's billion-dollar merger with Dick's Sporting Goods boosted the sports retailer's stock by 85.7 percent. Dick's is offering $24 in cash or 0.1168 of its own shares for each Foot Locker share. However, Dick's stock fell 14.6 percent.
Cisco's stock soared 4.8 percent after the networking equipment maker raised its annual outlook due to strong demand for AI data centers. On the flip side, Meta's stock dropped 2.3 percent due to concerns about the capabilities of its new top AI, Behemoth.
UnitedHealth Takes a Hit; Under Investigation
UnitedHealth's stock dropped 10.9 percent to a five-year low after the Wall Street Journal reported that the U.S. Justice Department is investigating the company for potential Medicare fraud. UnitedHealth said it has no knowledge of the probe.
Oil Prices Plummet; Potential Iran Deal on the Horizon
Speculation about a potential nuclear deal between the U.S. and Iran pushed down prices for Brent and WTI crude oil by more than two percent, to $64.68 and $61.80 per barrel, respectively. President Trump said the U.S. is close to an agreement with Tehran, which could lead to more Iranian oil on the market.
The overall AI market is expanding at an unprecedented pace, with projections showing the overall AI market growing from approximately $372 billion in 2025 to over $2.4 trillion by 2032, at a compound annual growth rate (CAGR) of about 30.6%. The AI hardware market is projected to grow from $25 billion in 2024 to $76.7 billion by 2030, with a CAGR of 20.5%. AI is increasingly embedded across industries, from medical devices to autonomous vehicles, and cloud-native AI platforms are democratizing AI by lowering technical barriers. Despite periodic profit-taking by investors, the overall growth outlook for AI-driven tech firms remains robust.
- In light of the Nasdaq's downturn due to profit-taking in the AI sector, there might be a need for more detailed community policy regarding investments in technology-focused businesses.
- As the AI market is forecasted to grow significantly, companies should consider revising their employment policies to accommodate the increasing demand for AI-related skills in various industries such as finance, business, and technology.
