tech shares in the US soften following the unveiling of a critical study from MIT

The tech sector took a hit this week, with the US tech stocks experiencing a significant decline on Tuesday. The Massachusetts Institute of Technology (MIT) and comments from OpenAI CEO Sam Altman are believed to be the main triggers for this drop.

According to a study published last month in the journal 'Algorithm Bridge,' 95% of companies have yet to see measurable benefits from investing in generative AI. Only 5% of companies, however, have seen significant returns. This finding could explain the recent downturn in tech stocks, as investors reassess the potential returns on their AI investments.

Nvidia, Palantir, and chip designer Arm were particularly affected by the decline, along with strongly performing stocks like Oracle and AMD. The AI boom, which had been driving the US market rally since May, seems to have burst, showing how sensitive markets are to negative news from the sector.

The decline in US tech stocks also put pressure on other markets. Asian markets experienced a decline on Wednesday, with Japan's Nikkei 225 falling 1.8%, South Korea's Kospi falling 1.9%, and Hong Kong's Hang Seng Index falling 0.6%.

The Financial Times reported that the decline in US tech stocks was due to earlier warnings about the possible overvaluation of the AI boom. Sam Altman, CEO of OpenAI, recently spoke of a possible "AI bubble" and warned of inflated expectations. Despite his comments, no direct quotes from Altman in relation to this study are available.

The important study highlights a dropout wave among elite students concerned about the risks of Artificial General Intelligence (AGI) and notes that current AI models are still far from possessing true scientific discovery capabilities.

Despite the losses in the tech sector, other sectors like consumer goods, utilities, and real estate gained. This shift shows a diversification in the market, as investors seek safer options amidst the uncertainty surrounding AI investments.

The S&P 500 fell 0.7% due to the decline in US tech stocks on Tuesday, and the Nasdaq Composite lost 1.4% - its biggest daily drop since early August. These losses serve as a reminder of the risks associated with investing in new technologies, and the importance of careful consideration and strategic planning.

tech shares in the US soften following the unveiling of a critical study from MIT