A decline in stocks in the artificial intelligence industry sent markets around the world lower on Thursday, while oil prices reached their highest levels since May amid the war with Iran.
The Standard & Poor’s 500 index fell 1.3 percent after steeper losses in Asia, whose markets are filled with artificial intelligence and other technology stocks. The Nasdaq Composite Index was down 2.4 percent, as of 12:56 p.m. ET, but stocks outside the technology sector fared better, and the Dow Jones Industrial Average was down a more modest 40 points, or 0.1 percent.
AI-related stocks have been shaken by concerns that their prosperity may be under threat because of how expensive it is to borrow money to build data centers and buy more AI chips. Concerns also remain that stock prices have risen too high in the midst of a years-long frenzy, even though companies in the industry continue to report growth.
For example, Lam Research, whose equipment and services help make semiconductors, reported earnings and revenue gains over the summer that were slightly stronger than analysts expected. This usually helps boost the stock price, but Lam Research stock fell 11.1 percent.
It gave a range of its earnings expectations this quarter whose midpoint was slightly below analysts’ expectations. Its shares also entered the day with a 52.4 percent gain for the year so far, nearly quadrupling the already healthy gains for the S&P 500 overall, leaving plenty of room for potential disappointment.
Other big tech stocks were flat after their quarterly reports included at least some encouraging nuggets.
Meta Platforms, which pays its proxy Muse AI, lost 7.4 percent after reporting stronger fourth-quarter revenue than analysts expected, though its earnings were lower than that. The company behind Facebook and Instagram also said it is creating a new class of stock to raise money to pay for AI investments and other expenses.
Tesla shares fell 2.1 percent after fluctuating between gains and losses in the morning. It reported stronger earnings for the summer than analysts expected, although its revenues were weaker than expected.
The global tide against AI stocks sent NVIDIA stock down 4.3 percent. As the largest stock on Wall Street by overall value, the chip giant had the heaviest weighting on the S&P 500.
CoreWeave, which has borrowed money to buy AI chips from Nvidia and leases them to customers via the cloud, has been particularly shaken in recent weeks by concerns about its debt. It fell by 9.6 percent, despite oscillating between broad gains and losses of about four percent over the past two days.
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The weakness in AI and other technology stocks began in Asia, with South Korea’s Kospi falling 3.5 percent, Hong Kong’s Hang Seng falling 3 percent, and Japan’s Nikkei 225 falling 2.7 percent.
The Toronto Stock Exchange was down more than one per cent as of press time, with Canadian technology stocks including Celestica falling more than 11 per cent and Shopify nearly four per cent.
The jump in oil prices also affected global stock markets.
The price of a barrel of Brent crude rose 2.9 percent to $111.99 after touching its highest levels in five months. It is at the high end of the $97 to $112 range it was in October due to uncertainty about when the war with Iran will allow the global energy industry to return to normal.
In Europe, the French CAC 40 stock index fell to one of the continent’s biggest losses, falling by 1.4 percent. It has fewer technology stocks than the Asian or US indices, but was hurt by another jump in French government bond yields.
Yields there have generally been higher on concerns about the government’s large debt burden and a strained budget. Violent protests across France have increased pressure on the government to increase spending, which could increase its debt.
Concerns about huge government debt are weighing on almost every advanced economy in the world, including the United States. Such concerns have pushed yields in the US bond market to their highest levels in decades, along with rising inflation, signs of a still strong US economy and other factors.
But US yields fell sharply on Thursday in a sign that investors are buying US government bonds in search of something safer to own as AI stocks decline.
The yield on the 10-year Treasury note fell to 4.98 percent from 5.13 percent late Wednesday and from more than 5.30 percent earlier this month. This is a big step for the bond market, although the 10-year bond yield is still well above its level of 3.97 percent before the war with Iran.
Thursday’s drop in yields came despite another report suggesting the US economy may be in better shape than economists expected. She said fewer American workers filed for unemployment benefits last week, which may indicate that layoffs remain low across the country.
This strong economy has broadly helped US companies achieve greater profits, which pushed the US stock market to a record high earlier this month despite the many concerns sweeping it. The majority of stocks within the S&P 500 rose on Thursday, but were drowned out by declines in more influential technology stocks.
Procter & Gamble, Lockheed Martin and CSX were among the latest companies to join the list of those at the top of summer earnings forecasts, and gains in their stocks helped limit market losses on Thursday.
CEO Shailesh Jejurikar said P&G expects “geopolitical and economic challenges” to continue, but is standing by its outlook for growth in revenues, profits and other measures for the full year. The stock price of the company behind the Crest, Olay and Oral-B brands rose 6.3 percent.
– With a file from Global News’ Ariel Rabinovich
& Edition 2026 The Canadian Press
