Tech stocks tumble for a second day. Here’s what’s behind the selloff.

A significant selloff in technology stocks continued for a second day as investors expressed doubts about the profitability of artificial intelligence, which has been driving high valuations for companies like Alphabet, SpaceX, and Nvidia. The Nasdaq Composite dropped 580 points, marking a 2.2% decline, following a 1.3% decrease the previous day. This volatility reflects concerns over potentially inflated earnings expectations. Notably, major tech companies such as Meta Platforms and Microsoft have entered “bear” market territory, with their shares falling over 20% from recent peaks. The S&P 500 and Dow Jones Industrial Average also experienced declines. Despite a rocky start, some tech stocks rebounded by the end of the trading day, with Alphabet and Amazon showing slight gains, while Nvidia and Broadcom saw significant losses. SpaceX shares, which had surged after its IPO, have since retreated amid concerns about its valuation. Investors are now seeking more evidence that AI investments will lead to substantial revenue growth, as most users currently access free versions of AI tools. However, the number of households paying for AI services has increased significantly, highlighting AI’s commercial potential. QUESTION: How might the current skepticism about AI’s profitability impact future investments in technology and innovation?