Shares of technology companies fell on a highly volatile session as traders assessed the risk of an artificial-intelligence bubble bursting.
The Nasdaq Composite was down more than 3.5% at one stage in a selloff that bore eerie echoes of Friday's rout.
"The Magnificent Seven have moved from being cash-cow buyback machines to much more capital-intensive businesses, with some needing to issue shares -- a complete 180-degree shift that should command a much lower multiple," said Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund. "Semis and the rest of the AI complex still have the best fundamentals, but the charts are parabolic and the hurdle for further upside keeps rising."
The PHLX SOX Semiconductor index, which has registered the biggest gains and losses related to recent swings of sentiment on AI, logged a 12% gap between its highs and lows of Tuesday's session.
Multibillion-dollar AI startups were vying for investors' attention. OpenAI, which kick-started the AI boom with the 2022 release of its chatbot ChatGPT, filed confidentially for an initial public offering. Anthropic, which has already filed its IPO paperwork, said it was releasing a next-generation "Mythos-class" model to the general public with guardrails that remove dangerous capabilities related to areas such as cybersecurity and biological research.
