The sharp drop is the latest sign of anxiety creeping through Wall Street over how long it will take AI companies to see returns on massive investments.
You own land, and you decide to plant it full of one type of crop because the forecast promises you an excellent harvest. You don’t have money, so you get a deposit from people buying the crop, in return of a certain share of the harvest. But most people that did so actually believe the forecast was very conservative and the crop will end up even bigger, so they’ll expect more than you promised.
Then the forecast changes, and the harvest might end up smaller, and much smaller than the people expected. Some want their deposit back, but to do so they have to sell that share to someone else, but they buy it with the current forecast and demand, and pay way less for it.
People buying Caterpillar expected for a massive construction boom. Any kink to that forecast is going to cause some people to reconsider and pull their money to the next potential company able to fly to the moon.
You own land, and you decide to plant it full of one type of crop because the forecast promises you an excellent harvest. You don’t have money, so you get a deposit from people buying the crop, in return of a certain share of the harvest. But most people that did so actually believe the forecast was very conservative and the crop will end up even bigger, so they’ll expect more than you promised.
Then the forecast changes, and the harvest might end up smaller, and much smaller than the people expected. Some want their deposit back, but to do so they have to sell that share to someone else, but they buy it with the current forecast and demand, and pay way less for it.
People buying Caterpillar expected for a massive construction boom. Any kink to that forecast is going to cause some people to reconsider and pull their money to the next potential company able to fly to the moon.