"After years of chasing high-growth tech companies in a zero-interest-rate environment, many investors are now seeking more stable, income-generating assets amid economic uncertainty and falling interest rates. The spectacular run-up in tech valuations, particularly in AI-related stocks, has left many investors concerned about stretched valuations and the sustainability of growth narratives, prompting a defensive shift toward companies that can demonstrate profitability and return cash to shareholders."
"But that latter profile has taken a hit in recent weeks, as the likes of Oracle Corp. (NASDAQ: ORCL), Amazon.com Inc. (NASDAQ: AMZN), and Meta Platforms Inc. (NASDAQ: META) tap the credit market for billions to fund artificial intelligence projects. The result is the first sustained selloff for the group since April, with the Nasdaq 100 leading the broader market lower as investors ditch tech winners in favor of more defensive stocks."
Investors are reallocating capital from high-growth technology firms into dividend-paying, blue-chip stocks to secure income and reduce risk. Years of chasing growth in a zero-interest-rate era left valuations stretched, especially among AI-related companies, raising concerns about sustainability. The largest tech firms are shifting spending away from buybacks toward capital expenditures, increasing credit market activity to fund artificial intelligence projects. This has produced a sustained selloff in Big Tech and pulled the Nasdaq 100 lower as investors favor defensive names. Dividend-paying, old-economy stalwarts benefit from demand for steadier cash returns. Volatility, measured by the Cboe VIX, climbed above its long-term average.
Read at 24/7 Wall St.
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