The New York Stock Exchange closed sharply lower on Friday due to renewed concerns about the profitability of key players in artificial intelligence (AI).
The tech-heavy Nasdaq fell by 1.69%, the Dow Jones dropped 0.51%, and the S&P 500 declined by 1.07%, reversing gains after hitting record highs in the previous session.
“The AI sector generates so much enthusiasm that any signs of concern risk creating volatility,” Tim Urbanowicz of Innovator Capital Management said in an interview with AFP.
Broadcom, a semiconductor company, weighed heavily on Wall Street despite reporting better-than-expected results for the fourth quarter of its fiscal year.
Investors were rattled by remarks from Broadcom CEO Hock Tan, who highlighted a $73-billion order backlog for AI-related products. The figure fell short of investor expectations, triggering a sell-off.
Broadcom shares tumbled 11.43% to $359.93, wiping approximately $200 billion from the company’s market value.
On Thursday, Oracle’s stock plummeted by 4.58% to $189.74 after releasing disappointing quarterly results. The cloud computing giant has accumulated substantial debt in its push to become a leader in AI infrastructure.
The financial reports of many AI-related companies have become key events for the market, added Urbanowicz, noting concerns over the profitability of the sector’s spending.
On the macroeconomic front, the US market is monitoring upcoming data to refine expectations for the Federal Reserve’s future monetary policy after its rate pause earlier this week.
