Tech and AI stocks declined on Wednesday, leading to significant drops in the Nasdaq and S&P 500, as investors reacted to potential new export controls under the Biden administration and comments on Taiwan by former President Donald Trump. The Dow Jones Industrial Average, which had closed nearly 750 points higher the previous day, remained flat on Wednesday.
In the afternoon, the Nasdaq fell by 2.79%, while the S&P 500 decreased by 1.32%. The Dow Jones increased slightly by 0.6% to 41,201.
The decline in AI stocks began late Tuesday after Bloomberg reported that the Biden administration is considering severe trade restrictions if firms like Tokyo Electron and ASML Holding continue to provide China access to advanced semiconductor technology. The potential new foreign direct product rule (FDPR) would significantly crack down on the sharing of American technology with China. This rule applies to chips containing even minimal American-made technology and would impact both U.S. and non-U.S. companies.
Former President Donald Trump, in an interview with Bloomberg Businessweek earlier in the day, stated that he believes Taiwan should compensate the U.S. for its defense efforts. He also claimed that Taiwan has taken “about 100%” of America’s semiconductor business, noting that Hsinchu, Taiwan-based TSMC manufactures approximately 90% of the world’s most advanced chips.
AI stock performances on Wednesday afternoon were as follows:
Nvidia dropped by 7.08%
Advanced Micro Devices decreased by 8.48%
Super Micro Computer shares fell by 6.8%
Broadcom declined by 7.04%
Micron Technology was down by 5.54%
ASML fell by 11.48%
Tokyo Electron shares dropped nearly 11.12%, and TSMC’s Taiwan-listed stock slipped by 6.3%.
Tech stocks also faced declines as investors sold off AI stocks. Apple, Meta, Amazon, and Alphabet were down by 2.6%, 5%, 3%, and 1.6%, respectively, by the afternoon.