Tumbling AI Stocks Overwhelm Markets

The latest shudder for AI stocks pulled markets sharply lower around the world on Thursday.

• The S&P 500 fell 93.74 points, or 1.2%, to 7,663.43 for its worst day since July.
• The Dow Jones Industrial Average edged up 11.89 points, or less than 0.1%, to 52,867.98.
• The Nasdaq composite fell 694 points, or 2.6%, to 26,008.86.

The weakness for tech stocks was so overwhelming that it masked strength for the rest of the market, where the majority of US stocks actually rose, the AP reports. Treasury yields sank even though Brent oil's price touched its highest level since May.

AI-related stocks have become shaky on worries that their boom may be under threat because of how expensive it's become to borrow money to build data centers and buy more AI chips.

• Lam Research, whose equipment and services help make semiconductors, reported gains in profit and revenue for the summer that were slightly stronger than analysts expected, for example. Usually, that helps boost a stock's price, but Lam Research's tumbled 11.8%. It gave a range for its forecast for profit this quarter whose midpoint was slightly below analysts' expectations. Its stock also came into the day with a 52.4% surge for the year so far, nearly quadruple the gain for the overall S&P 500, leaving plenty of room for potential disappointment.

Other big tech stocks likewise fell following their own quarterly reports that included at least some encouraging nuggets. Meta Platforms, which is pushing its Muse AI agent, lost 7% after reporting stronger revenue for the latest quarter than analysts expected, though its profit fell short. Tesla fell 3.1% after reporting a stronger profit for the summer than analysts expected, though its revenue was weaker than forecast. The global tide against AI stocks knocked Nvidia down 4.4%. Because it's the largest stock on Wall Street by total value, the chip giant was the heaviest weight on the S&P 500.

• CoreWeave, which has borrowed money to buy Nvidia's AI chips that it rents out to customers over the cloud, has been particularly shaky in recent weeks because of worries about its debt. It dropped 10.1%.
• The weakness for AI and other tech stocks began in Asia, where indexes are full of AI industry players. South Korea's Kospi tumbled 3.5%, Hong Kong's Hang Seng dropped 3%, and Japan's Nikkei 225 sank 2.7%.

Nearly two out of every three stocks within the S&P 500 rose Thursday, only to get drowned out by the drops for more influential tech stocks. Procter & Gamble, Lockheed Martin, and CSX were among the latest companies to join the list of those topping profit expectations for the summer, and gains for their stocks helped limit the market's losses on Thursday. CEO Shailesh Jejurikar said Procter & Gamble expects "geopolitical and economic challenges" to continue, but it stood by its forecasts for growth in revenue, profit, and other measures for the full year. The stock price for the company behind the Crest, Olay, and Oral-B brands rose 5.6%.