NEW YORK (AP) — Drops for stocks in the artificial-intelligence industry are dragging markets down worldwide on Thursday, while oil prices hit their highest levels since May on worries about the war with Iran.
The S&P 500 sank 1% following even sharper losses in Asia, whose markets are full of AI and other technology stocks. The Nasdaq composite was down 2%, as of noon Eastern time, but stocks outside of tech did better, and the Dow Jones Industrial Average was down a modest 14 points, or less than 0.1%.
AI-related stocks have been 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. Concerns also remain that stock prices simply shot too high in their yearslong frenzy, even though companies in the industry continue to report growth.
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 10%.
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 already healthy gain for the overall S&P 500, leaving plenty of room for potential disappointment.
Other big tech stocks were unsettled following their own quarterly reports that included at least some encouraging nuggets.
Meta Platforms, which is pushing its Muse AI agent, lost 5.4% after reporting stronger revenue for the latest quarter than analysts expected, though its profit fell short. The company behind Facebook and Instagram also said it’s creating a new class of stock to raise money to pay for AI investments and other expenses.
Tesla slipped 0.8% after flipping between gains and losses in the morning. It reported 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 3.7%. 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 7.8%, though it’s swung between wide gains and losses of roughly 4% within each of the last two days.
The weakness for AI and other tech stocks began in Asia, where South Korea’s Kospi tumbled 3.5%, Hong Kong’s Hang Seng dropped 3% and Japan’s Nikkei 225 sank 2.7%.
Also weighing on global stock markets was a jump in oil prices.
The price for a barrel of Brent crude oil rose 2.2% to $111.19 after touching its highest level in five months. It’s at the high end of the $97 to $112 range it’s been yo-yoing through in October on uncertainty about when the war with Iran will allow the global energy industry to return to normal.
In Europe, France’s CAC 40 stock index fell to one of the continent’s sharpest losses with a drop of 1.4% It has fewer tech stocks than Asian or U.S. indexes, but it was hurt by another jump in yields for French government bonds.
Yields have been generally climbing there because of worries about the government’s big debt load and strained budget. Violent protests across France have raised pressure on the government to increase spending, which could add further to its debt.
Worries about big government debt are weighing on almost every developed economy in the world, including the United States. Such concerns have pushed yields in the U.S. bond market to their highest levels in decades, along with high inflation, signals of a still-strong U.S. economy and other factors.
