Shares of artificial intelligence companies fell on Thursday, leading to mixed performance in the US market, at a time when losses in oil prices supported most major indices.
The Standard & Poor’s 500 index fell by 0.1 percent, after falling from its highest record level in the previous session, approaching recording the longest series of gains in three decades. On the other hand, the Dow Jones Industrial Average rose by about 720 points, or 1.4 percent, by 10:15 a.m. EST, while the Nasdaq Composite Index fell by 0.7 percent, according to the Associated Press.
The decline in oil prices contributed to supporting a large portion of stocks, as Brent crude, the global standard, fell by 2.9 percent to reach $94.96 per barrel. This decline came after previous rises driven by escalating tensions between Iran, the United States and its allies.
Investors believe that any potential agreement between Washington and Tehran to reopen the Strait of Hormuz to oil tankers may enhance the flow of global supplies and put pressure on prices, which was reflected in market sentiment. Strong earnings results for American companies also contributed to supporting the Standard & Poor’s 500 index during a series of gains that lasted 9 days and ended on Wednesday.
In corporate movements, Toro Company’s shares rose by 1.4 percent, after announcing quarterly results that exceeded analysts’ expectations, while raising its expectations for annual revenues and profits, driven by strong demand for its equipment.
On the other hand, shares of a number of companies declined despite achieving better-than-expected profits, especially in the rapidly growing technology sector.
Broadcom’s shares fell by 14.5 percent, despite its quarterly results exceeding expectations, after investors considered that future expectations were not sufficient.
CEO Hock Tan said that the company’s revenues from artificial intelligence chips doubled to exceed $10.8 billion during the current quarter, with expectations of growth exceeding 200 percent in this sector.
But the market seemed to expect more, especially after the company’s shares rose by 38.5 percent since the beginning of the year, making it one of the biggest beneficiaries of the artificial intelligence boom and the sixth largest company by market value on Wall Street.
Analysts believe that artificial intelligence stocks may have risen at an exaggerated pace and become expensive, which threatens a slowdown after a strong rise in the Standard & Poor’s 55 index that lasted 9 weeks, which is the longest since 2023.
Shares of other companies related to artificial intelligence also declined, as “Marvel Technology” shares fell by 4.6 percent after strong gains earlier in the week, and “Micron Technology” shares fell by 8.1 percent despite benefiting from the sector’s boom.
CrowdStrike Holdings’ shares also declined by 7.9 percent despite its results exceeding expectations, with the company announcing the division of its shares to increase access to individual investors. The company has achieved a strong increase since the beginning of the year, amounting to 59.5 percent.
In the fashion sector, the shares of PVH, which owns the Calvin Klein and Tommy Hilfiger brands, fell by 24.7 percent, despite its results exceeding expectations, amid warnings of the prolonged effects of the conflict in the Middle East on demand in some markets.
In the bond market, US Treasury bond yields declined in conjunction with the decline in oil prices, as the yield on ten-year bonds fell to 4.45 percent from 4.49 percent. This decline contributes to relieving pressure on financial markets and the economy in general.
Markets are warning that rising global returns may slow economic growth and put pressure on stocks and investments, and have already led to a rise in mortgage rates to their highest levels in 9 months, which may limit the ability of companies to finance expansion projects related to artificial intelligence.
In economic data, reports showed a slight increase in unemployment claims, which may indicate a limited slowdown in the labor market, in addition to a slowdown in worker productivity growth during the first quarter compared to analysts’ expectations.
At the global level, European stocks recorded a slight increase, while Asian markets declined. The South Korean Kospi index fell by 1.8 percent, the Hang Seng in Hong Kong by 1.5 percent, and the Japanese Nikkei 225 by 1.4 percent.
