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[The U.S. CPI rose 3.0% in June, and the core CPI rose 3.3% in the past 12 months, which is still far from the target set by the Federal Reserve.]

On August 5, the US stock market plummeted, with the Nasdaq Composite Index, which is concentrated in technology stocks, falling 3.4%. The market value of the "Big Seven" evaporated by $1.43 trillion. The stock prices have since recovered, but the total market value loss for the day was still slightly more than $650 billion. All sectors of the S&P 500 index fell, and the index eventually fell 3%. All 30 components of the Dow Jones Index closed lower, and the blue-chip index fell 1,034 points.

The recent decline in US stocks has lasted for two weeks. There are three reasons for the recent plunge in US stocks: the market began to question whether the artificial intelligence (AI) craze had a bubble, the Federal Reserve was reluctant to cut interest rates, and rising unemployment in the United States triggered concerns about an economic recession.

Questioning whether AI fever is a bubble

The AI ​​craze began in the late 2010s, but the hot spot was the advent of ChatGPT in December 2022, and generative AI became a hot topic in the market. Microsoft co-founder Bill Gates said that artificial intelligence is the most revolutionary technology he has seen in decades, on par with computers, mobile phones and the Internet. Since 2023, technology stocks represented by the "Seven Heroes of the U.S. Stock Market" have led the U.S. stock market to new highs. After the stock market continued to rise, investors had a big question in their minds: When will they start making money from AI? If technology giants cannot get a return on their investment in AI, investors will question whether the high stock prices of technology giants have become a bubble.

In the 18 months since ChatGPT was born, tech giants have promised that the technology will revolutionize every industry, justifying tens of billions of dollars in data centers and the semiconductors needed to run large AI models. Compared with that vision, the products they have launched so far feel somewhat puny, and there is no clear path to profitability for chatbots. Investors are starting to get uneasy. For example, Google parent Alphabet reported 29% growth in its cloud business in July, while Microsoft's Azure cloud business (the core part of its AI business) also grew 29%, but the growth rate was lower than analysts expected.