Global decline in AI stocks deepens as oil prices continue to rise

STAN CHOE, AP Business Writer

NEW YORK (AP) — Stock markets are lower Friday on further selling in computer chip companies and other winners of the artificial intelligence technology boom. Meanwhile, oil prices continue to rise due to the war with Iran.

The S&P 500 index fell 1.3%, on track to end its first losing week in the past three weeks and third losing week in the past 16 weeks. As of 9:35 a.m. ET, the Dow Jones Industrial Average was down 451 points, or 0.9%, and the Nasdaq Composite Index was down 2.1%.

Semiconductor stocks were again at the center of the decline. They have been under pressure for weeks over concerns that strong demand for computer memory and processors may become unsustainable if prices rise too high and AI ultimately doesn’t produce the profits and productivity it promises.

Nvidia fell 3.4%, making it the most heavily weighted stock in the S&P 500.

Applied Materials fell 6.9%, capping its year-to-date gain to 103%, and Micron Technology fell 4.8%, capping its year-to-date gain to 184%.

The selling spread around the world, with stocks such as Taiwan Semiconductor Manufacturing Co. falling 7.3%, followed by a 6.5% drop in Taipei, 4% in Tokyo, and 3% in Shanghai.

South Korea’s stock market was closed for a public holiday, allowing the market to take a breather. It has been at the center of recent AI trends due to its dominance by two giant technology companies: Samsung Electronics and SK Hynix. Last week alone, Seoul’s Kospi stock index rose 6.2% on one day, but fell 6.4% and 8.9% on two days.

Adding to the pressure on Wall Street on Friday, several stocks fell following their latest earnings reports. That’s a sharp contrast to the rest of the week, when stocks soared after companies like Goldman Sachs and BlackRock posted spring profits that beat analysts’ expectations.

Netflix fell 10.9% as its latest quarter’s revenue fell slightly below analysts’ expectations, even though its profit beat expectations. Sales and profit forecasts for this summer were also lower than expected.

Intuitive Surgical, a maker of robotic surgical systems, fell 10.8% despite beating expectations in its latest quarter. Analysts cited concerns that the expiration of enhanced tax credits that helped lower health insurance premiums for many Affordable Care Act participants could slow growth in procedures.

Elon Musk’s SpaceX fell 6.2%, hitting its lowest price since its shares began trading on the Nasdaq more than a month ago. The company, which owns the xAI business, was also caught up in the volatility in AI stocks, and on Thursday had to abort a test flight of its massive Starship rocket less than a second after launch.

The launch was aborted as part of the engine failed to ignite, creating a cloud of smoke and steam.