Wall Street tumbles amid dwindling AI frenzy
NEW YORK — U.S. stock indexes fell sharply Thursday as Wall Street’s frenzy around artificial intelligence technology continued to fizzle.
The S&P 500 sank 1.6% for its fifth drop in six days after setting an all-time high last week. Concerns about the U.S. economy’s future have been behind much of the drop, including worries about how tariffs pushed by President Donald Trump could worsen inflation, and Wall Street’s main measure of health has lost all but 1.4% of its rally since Election Day.
The Dow Jones Industrial Average dropped 193 points, or 0.4%, and the Nasdaq composite tumbled 2.8%.
Weighing most heavily on the market was superstar stock Nvidia, one of Wall Street’s most influential companies that’s been leading the market for years. After initially rising at the open of trading after a better-than-expected profit report, Nvidia quickly slid to a loss of 8.5%.
Overperforming earnings reports have become routine for Nvidia, whose chips are powering the surge into artificial intelligence technology, but this was the company’s first since DeepSeek shook the entire AI industry.
After the Chinese upstart said it developed a large language model that can compete with the world’s best without using the most expensive chips, Wall Street had to question all the spending it assumed would go into Nvidia’s chips and the ecosystem that’s built around the AI boom, such as electricity to power large data centers.
Nvidia’s performance for the latest quarter, along with its forecasts for upcoming results, were “good enough to keep the debate moving in a positive direction,” according to analysts at UBS led by Timothy Arcuri.
But it apparently wasn’t enough to send Nvidia’s stock higher, particularly given criticism that its price had already leaped too high too quickly. After more than tripling two years ago, Nvidia’s stock more than doubled last year as its sales exploded.
The market also soured on Salesforce, which fell 4% despite topping analysts’ profit expectations for the latest quarter. Several analysts called the performance solid and the company continued to tout its AI offerings, but it gave a forecast for upcoming revenue that fell short of expectations.
One AI-related company bucking the trend was Snowflake. The AI data cloud company rose 4.5% after delivering stronger profit and revenue for the latest quarter than analysts expected.
It joined a range of stocks on the more staid end of Wall Street, ones that didn’t grab as many headlines as AI stocks in recent years. Despite the sharp loss for the overall S&P 500, close to 2 out of every 5 stocks in the index climbed.
A 1.7% rise for shares of Berkshire Hathaway, the company run by famed investor Warren Buffett, was one of the strongest upward forces on the index. The owner of Geico, BNSF Railway and other businesses has built a hoard of unused cash recently. That could indicate Buffett, who’s famous for buying stocks when prices are low, may not see much worth purchasing in a market that critics say looks too expensive.
Some investors have been waiting for other stocks to pick up the market’s leadership baton from Nvidia and the handful of big stocks that dominated for years. Nvidia alone accounted for a little more than 22% of the entire total return for the S&P 500 index last year.
All told, the S&P 500 fell 94.49 points to 5,861.57 Thursday. The Dow Jones Industrial Average dropped 193.62 to 43,239.50, and the Nasdaq composite tumbled 530.84 to 18,544.42.
In the bond market, the yield on the 10-year Treasury edged up to 4.27% from 4.26% late Wednesday.
Information for this article was contributed by Matt Ott and Elaine Kurtenbach of The Associated Press.