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RFK Jr. wasn’t the only person with a New York City bear story on Monday.
Tech stocks dropped Monday with the rest of the market on fears of economic slowdown as well as heightening concerns over the viability of the AI boom, but rebounded Tuesday as investors corrected for the sell-off.
The decline began after the Nikkei Index slipped in early trading in Japan Sunday night. Asian stocks tumbled further than ever since 1987, and US markets did the same in the morning before stabilizing in the afternoon.
“Financial markets are supposed to capture the wisdom of the crowd, but on Monday the crowd ran in all directions waving its hands in the air screaming,” James Mackintosh wrote at the Wall Street Journal, adding that “the triggers couldn’t possibly justify the scale of the moves” from the sell-off.
But while there was consternation on Wall Street over the decline in valuation—and concern over the role of AI in driving a bubble moment—not everyone was panicked about the financial outlook.
“We don’t expect risk sentiment to deteriorate much further,” Capital Economics senior markets economist Diana Iovanel wrote in a note Friday, before the selloff. “The upshot is that we doubt the economy will stand much in the way of the AI-fueled bubble picking up steam again soon.”
In an investor’s note Monday, UBS Global Wealth Asia Pacific Investment Office head Min Lan Tan said that the firm sees the fear over the technology’s over-promise as “premature.”
“It will likely take some time for companies to demonstrate that they can earn a return on their AI investments, but there are no indications that companies are backing away from these investment plans given the technology’s promise,” Tan wrote.
Wedbush tech analyst Dan Ives and his team said in a Monday memo that despite the decline, they were still bullish on tech overall. Rather than seeing the sell-off as a moment of danger, investors should see it as a moment of opportunity, he said.
“Over the years these massive sell-offs have created the best long term opportunities to own the likes of Microsoft, Apple, Nvidia, Salesforce, Oracle, Palo Alto, Tesla, Alphabet, Amazon and other tech winners,” Ives wrote. “In a nutshell…this is not the time to panic, its the time to go bargain hunting.”