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Brief news summary
Several AI-related stocks, including Advanced Micro Devices, C3.ai, Arm Holdings, and Micron Technology, experienced declines on Tuesday amid a lack of company-specific news to explain the drop. Investors are apparently more focused on broader economic developments, particularly the Federal Reserve's plans for interest rate cuts. Fed Chair Jerome Powell has suggested that rate cuts are on the horizon, but the central bank is in no rush to implement them as they await positive inflation data. Economic indicators like the ISM manufacturing index and resilient jobs data indicate that inflation is not fully under control, making a rate cut in June less likely. The potential for higher interest rates and tighter borrowing costs could dampen the adoption of expensive AI technologies, leading to reduced demand for AI-related stocks. Investing in these stocks can be risky due to market volatility, so investors should carefully assess their risk tolerance and ability to withstand market fluctuations.Artificial intelligence (AI) stocks, including Advanced Micro Devices (AMD), C3. ai, Arm Holdings, and Micron Technology, experienced a decline in their share prices on Tuesday. The drop was attributed to broader economic developments rather than company-specific news. Market watchers have been anticipating the Federal Reserve's interest rate cuts, but Fed Chair Jerome Powell's recent comments indicated that they are not in a rush to implement these cuts until inflation is under control. The Institute for Supply Management's manufacturing index showed growth in the sector, suggesting that inflation is not fully tamed and raising doubts about a rate cut in June.
Additionally, robust jobs data further indicated strong economic growth. Higher borrowing costs due to interest rate hikes may deter businesses from adopting costly AI technologies, affecting the revenue of companies like AMD, C3. ai, Arm Holdings, and Micron Technology. Despite the volatility of AI-related stocks, the long-term potential for AI remains promising.
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