Sales of technology company stocks have swept through global stock markets, and Milan’s was no exception. The sell-off was triggered by the sell-off that started from the New York Stock Exchange and spread to Asian markets, where the semiconductor sector – the physical components at the base of artificial intelligence progress, and more – was hit particularly hard: in South Korea, for example, the Kospi index lost about 10 percent, dragged down precisely by hi-tech stocks.
THE COLLAPSE OF EUROPEAN STOCK MARKETS
The negative wave then moved to Europe. Mid-session, the Milan stock exchange fell more than 1 percent, in line with Frankfurt, while Amsterdam was the worst-performing market on the continent due to the plunge of companies like Asml, Asm International, and Be Semiconductor, all active in the semiconductor sector.
Frankfurt was particularly weighed down by the weakness of Siemens (-5 percent) and Infineon (-4 percent) stocks. Piazza Affari, on the other hand, suffered from the collapse of Technoprobe (-5.7 percent) and Stmicroelectronics (-4 percent).
ARE INVESTMENTS IN ARTIFICIAL INTELLIGENCE SUSTAINABLE?
What worries investors most are doubts about the sustainability of the huge investments in artificial intelligence, which have not yet produced comparable economic returns: just consider that the major US tech companies – the so-called Big Tech – this year plan to collectively spend as much as 700 billion dollars on infrastructure and computing capacity.
Stmicroelectronics – the semiconductor company controlled by the Italian Ministry of Economy and the French public bank Bpifrance – is penalized by this negative market sentiment because its economic results are increasingly linked to the data center sector for artificial intelligence: the company indeed expects that the revenues of this division will reach 1 billion dollars already this year, instead of in 2030.
Technoprobe’s results – a Lombardy-based company specialized in probe cards for microchip testing – also depend on the semiconductor industry’s performance, which in turn is linked to artificial intelligence.
WHY DID PRYSMIAN FALL TOO?
Sales on the Milan stock exchange, however, were not limited to companies directly exposed to the microchip sector. Even Prysmian – a Milan-based company that manufactures cables for telecommunications and energy transmission – fell significantly, losing more than 4 percent.
Although Prysmian operates in a different sector from semiconductors, it is still exposed to the development of data centers and the electrical infrastructure necessary to power these facilities.
STELLANTIS PENALIZED BY WEAK REGISTRATIONS
Among the worst-performing stocks in the Ftse Mib – the Italian stock exchange index that gathers the forty largest capitalization companies – is also the automotive manufacturer Stellantis, which lost about 4 percent.
Stellantis was weighed down both by the general negative climate and the latest data on European registrations in May: despite a 4 percent year-on-year increase, Acea – the association of European car manufacturers – highlighted how the “persistent geopolitical difficulties” are “weighing on the sector’s outlook.”
