Global stock markets came under renewed pressure as weakness in AI-related stocks spread from Asia to the United States. The S&P 500 sank 1.3 per cent and the Nasdaq composite fell 2.4 per cent, though the Dow Jones Industrial Average managed a more modest 0.1 per cent decline as gains in non-tech stocks provided some support.
AI industry shares have been shaky on worries that the boom may be threatened by rising borrowing costs to fund data centres and chip purchases, and on concerns that prices have run too high after years of frenzy. Even as companies report growth, investors have punished any sign of disappointment.
Lam Research, which makes equipment for semiconductors, reported slightly stronger-than-expected profit and revenue for the summer, but its shares tumbled 11.1 per cent. The company's forecast for current-quarter profit came in slightly below analysts' expectations, and its stock had already surged 52.4 per cent this year, leaving little room for error.
Meta Platforms lost 7.4 per cent after reporting stronger-than-expected revenue but a profit that fell short. The company also said it is creating a new class of stock to raise money for AI investments. Tesla slipped 2.1 per cent after flipping between gains and losses; its profit beat expectations but revenue was weaker than forecast. Nvidia, the largest stock on Wall Street by value, fell 4.3 per cent. CoreWeave, which borrows to buy Nvidia chips for cloud rental, dropped 9.6 per cent on debt worries.
The sell-off began in Asia, where South Korea's Kospi tumbled 3.5 per cent, Hong Kong's Hang Seng dropped 3 per cent and Japan's Nikkei 225 sank 2.7 per cent.
Adding to market jitters was a jump in oil prices. Brent crude rose 2.9 per cent to $US111.99 a barrel, hitting its highest level since May. Prices have yo-yoed between $US97 and $US112 through October as uncertainty over the war with Iran persists.
In Europe, France's CAC 40 fell 1.4 per cent, hurt by a jump in yields on French government bonds amid concerns over the country's debt and budget, compounded by violent protests.
US bond yields fell as investors sought safety. The yield on the 10-year Treasury dropped to 4.98 per cent from 5.13 per cent, a major move, though still well above levels before the war with Iran. The decline came despite data showing fewer Americans applied for unemployment benefits, a sign of a solid economy that has helped companies report bigger profits. The majority of stocks within the S&P 500 actually rose on Thursday, but losses in heavily weighted tech stocks dragged the index lower.
Procter & Gamble rose 6.3 per cent after topping profit expectations, with its CEO noting continued geopolitical and economic challenges but reaffirming full-year forecasts for growth in revenue and profit.