Overnight, US stocks fell collectively as the magnificent 7 suffered sell-offs due to poor performance.

$S&P 500 Index (.SPX.US)$Dropped by 2.32%, marking the worst single-day performance since December 2022, and the first closing decline of more than 2% in 356 trading days. This is the longest continuous decline of less than 2% since 2007.

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

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

Regarding individual stocks, the market capitalization of the magnificent 7 evaporated by more than $760 billion, totaling over 5.5 trillion yuan.

$Tesla (TSLA.US)$Dropped by more than 12%, marking the largest single-day decline since September 2020, with a total market value falling below $700 billion.

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

AI is both the reason for success and failure.

The main reason for the plunge in US stocks is still due to concerns about the future of the magnificent 7 in AI.

In order to seize the opportunity in AI, these giants are increasing their capital expenditures and investing in AI.

According to Google's second-quarter earnings report, the company's capital expenditures doubled year-on-year due to 'smashing money' into 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 these companies to see returns on their large AI investments.

Alec Young, Chief Investment Strategist at Mapsignals, believes that investors realize that the returns on AI will take some time to materialize. In the short term, these giants' rising trend will be influenced by how much they invest in this area.

He pointed out: "The most important question is where are the returns on all the AI infrastructure spending? A lot of money has been spent, and perhaps returns will be achieved in a few years. But I think investors realize that returns take time to materialize, and that these giants' profits will be damaged in the short term due to their spending in this area."

Neville Javeri, Investment Manager at Allspring Global Investments, also stated that: "In the short term, there may be some AI fatigue, as some of the investments made by large technology companies in the field of AI may not see returns within the time frame expected by investors."

Previously, there were concerns on Wall Street about the bursting of the AI bubble, with some claiming that the rebound in artificial intelligence caused the S&P 500 index to grow by $9 trillion in the past year, and that this bubble is doomed to burst.

Although Wednesday may not be the beginning of the bursting of the bubble, such a significant drop will certainly raise investors' vigilance.

Some analysts believe that the decline is temporary.

Michael Sansoterra, Chief Investment Officer of Silvant Capital Management, said: "I don't think you will see any other stocks take profits except for those that have performed exceptionally well and maintained stable returns since the beginning of the year."

Todd Sohn from Strategas Securities said that the sell-off of technology stocks is painful but beneficial for the overall market outside of growth stocks because non-technology stocks are still strong.

Editor/Somer