The current artificial intelligence (AI)-driven market correction could impact the dollar’s status as a haven asset, Deutsche Bank’s global head of FX strategy, George Saravelos, said in a Friday (Oct. 30) note to clients, Bloomberg reported.
This view is supported by recent times when both tech stocks and the dollar were weak; the greater-than-ever scale of foreign exposure to U.S. stocks; and a trend in which U.S.-driven equity shocks lead to the dollar falling together with stocks and increasing foreign investors’ equity losses, Saravelos said, according to the report.
Because both U.S. real yields and equities have become tied to AI-related capital spending, Saravelos said, per the report, “The AI dollar is here.”
Bloomberg reported Friday morning that the Nasdaq fell 3% after having already lost more than $1.2 trillion in market capitalization since the beginning of October.
The decline has been driven by traders’ concerns about whether companies’ AI investments will pay off, according to the report.
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On Friday morning, Intel’s stock dropped 28% after its outlook missed estimates, and Amazon’s shares declined as the company reported higher capital spending, per the report.
CNBC reported Friday morning that while the Nasdaq Composite fell, the Dow Jones Industrial Average outperformed as traders shifted away from AI stocks.
As investors scrutinize the AI trade, neoclouds CoreWeave and Nebius have seen their shares drop 36% and 33%, respectively, during October, according to the report.
On Friday morning, the shares of companies tied to AI slipped while those of businesses in “defensive areas” such as consumer staples and healthcare rose, per the report.
Reuters reported Friday morning that tech companies’ losses drove Nasdaq to its lowest level in nearly three months. The report cited investors’ growing concerns about the cost of the AI infrastructure buildout and the uncertain timing of returns.
It was reported Thursday (Oct. 29) that Google parent company Alphabet saw its stock price drop 13%, and its market value lose $500 billion, after the company released quarterly results Wednesday (Oct. 28) that stoked investors’ fears about how the company is being impacted by the rise of AI.
It was also reported Thursday that while Alphabet has said demand for cloud services is rapidly increasing, the company’s quarterly filing showed that upward of a third of that quarterly growth stems from a joint venture that Alphabet partially owns.
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