Overnight, US stocks collectively fell, and the Magnificent 7 were sold off due to poor performance.

$S&P 500 Index (.SPX.US)$It fell by 2.32%, marking the worst single-day performance since December 2022. In 356 trading days, it closed with a decline of more than 2% for the first time, setting the record for the longest consecutive decline no more than 2% since 2007.

The Nasdaq also suffered a heavy blow, falling 3.64%, the largest single-day drop since October 2022, and closing at its lowest level since June 10.

The Dow Jones Industrial Average fell 1.25%, closing below 40,000 points for the first time in two weeks.

In terms of individual stocks, the market capitalization of the Magnificent 7 evaporated by more than $760 billion, with a total of over RMB 5.5 trillion.

$Tesla (TSLA.US)$The drop of more than 12% marks the largest single-day decline since September 2020, and the total market value has fallen below 700 billion US dollars.

$NVIDIA (NVDA.US)$Down more than 6%.$Meta Platforms (META.US)$,$Alphabet-C (GOOG.US)$falling more than 5%,$Microsoft (MSFT.US)$,$Intel (INTC.US)$The drop was more than 3%. Apple, $Amazon (AMZN.US)$It fell more than 2%.$Netflix (NFLX.US)$fell by more than 1%.

AI is both the reason for success and failure.

The main reason for the sharp fall in US stocks is still the concern that the Magnificent 7's prospects in AI are bleak.

In order to gain the initiative in AI, the giants have increased their capital expenditures and invested in AI.

Google's second-quarter financial report showed that the company's capital expenditure doubled year-on-year in order to invest heavily in AI. As a result, Google's stock price fell by more than 5%, marking its worst performance since January.

However, investors question how long it will take for the companies' large investments in AI to pay off.

Alec Young, Chief Investment Strategist at Mapsignals, believes that investors realize that it takes time for returns on investment in AI to materialize. In the short term, the giants' rise will be influenced by how much they invest in this area.

He pointed out, "The most important question is, where's the return on all the investment in AI infrastructure spending? A lot of money has been spent, maybe there will be a return in a few years. But I think investors realize that returns take time to materialize, and the giants' profits will be hurt in the short term by their spending in this area."

Neville Javeri, Investment Manager at Allspring Global Investments, also said, "In the short term, there may be a bit of AI fatigue, because the investments made by large tech companies in this field may not pay off in the expected time frame for investors."

Earlier, Wall Street had worries about an AI bubble bursting, believing that the rebound in artificial intelligence had created a $9 trillion bubble in the S&P 500 index over the past year, and that this bubble was bound to burst.

Although Wednesday may not be the start of the bubble burst, such a large drop will raise investors' alertness.

There are also some analysts who believe that the decline is only temporary.

Michael Sansoterra, Chief Investment Officer at Silvant Capital Management, said, "I don't think you'll see profit-taking on any stocks other than some that have exceptional performance and very stable returns since the beginning of the year."

Todd Sohn of Strategas Securities stated that the selling of technology stocks is painful, but it is beneficial to the overall market outside of growth stocks because non-technology stocks are still strong.

Editor/Somer