Tech stocks fall as investors question AI spending pace

Technology shares declined Tuesday after investors questioned whether corporate spending on artificial intelligence can justify current stock prices. The tech-focused index fell about 2 percent. International chipmakers also declined.

Market movement SpaceX shares fell below their $150 initial offering price before recovering to around $157. The company went public on 12 June and has traded in a volatile range since then. The broader technology sector had more than doubled from 2022 lows before Tuesday's decline. Semiconductor companies including Nvidia and Intel recorded the largest losses.

Arya said in a client note that sticky inflation and demand growth will support higher forecasts. He added that the industry is shifting focus to infrastructure and power constraints. Danni Hewson, head of financial analysis at AJ Bell, said the limited number of technology stocks on London markets helped the FTSE 100 remain positive while U.S. markets declined.

Investors will watch upcoming corporate earnings for evidence that artificial intelligence investments are producing profits.