AI boom meets cold: US technology stocks fell collectively on Tuesday, with Nvidia's earnings in the spotlight

U.S. technology stocks sold off on Tuesday, as concerns grew about high valuations for artificial intelligence companies and as investors prepared for Nvidia's earnings report this week. The tech-heavy Nasdaq index fell about 1.8 percent at the start of the day, while the S & P 500 fell about 1.2 percent. Companies at the heart of this year's AI boom are the biggest losers on Wall Street at this stage. NVIDIA (NVDA. O) fell as much as 3.5 percent, while Microsoft (MSFT. O), Amazon (AMZN. O) and Meta Platforms (META. O) all fell about 3 percent. Joanna Cochrane, chief investment officer at Schroders Group, said: "There is no doubt that we are entering the late-cycle phase of the market rally," noting "overvalued" and a "frothy environment." "We are still holding these stocks," Mr. Cochrane said, but added that "I do not recommend passive ownership of AI-related sectors at this time". Jonas Goltermann, deputy chief market economist at Capital Economics, said: "The renewed sell-off in US tech stocks has increased the focus on Nvidia's earnings, which will determine the direction of the broader tech sector in the coming weeks and towards the end of the year."