AI stocks tumble and drag down markets worldwide as oil prices climb

NEW YORK — Sharp drops for stocks in the artificial-intelligence industry are dragging down markets worldwide on Thursday, while oil prices hit their highest levels since May because of worries about the war with Iran.

The S&P 500 sank 0.8% following even sharper losses in Asia, whose markets are full of AI and other technology stocks. The Dow Jones Industrial Average was down 142 points, or 0.3%, as of 7:35 a.m. MDT, and the Nasdaq composite was 1.3% lower.

AI stocks have been shaky on worries that their boom may be under threat because of how expensive it's become to borrow money to build data centers and buy more AI chips. Concerns also remain high that prices simply shot too high for AI-related stocks in their yearslong frenzy, even though companies in the industry continue to report growth.

Lam Research, whose equipment and services help make semiconductors, reported gains in both profit and revenue for the summer that were slightly stronger than analysts expected, for example. Usually, that helps boost a stock's price, but Lam Research's tumbled 10.1% for one of the market's sharpest losses.

It gave a forecasted range for profit in the final three months of 2026 whose midpoint was slightly below analysts' expectations. Its stock also came into the day with a 52.4% surge for the year so far, nearly quadruple the already strong gain for the overall S&P 500, leaving room for potential disappointment.

Other big tech stocks fell following their own profit reports that included at least some encouraging nuggets.

Meta Platforms, which is pushing its Muse AI agent, lost 5.7% after reporting stronger revenue for the latest quarter than analysts expected, though its profit fell short.

Tesla dropped 2.5% despite reporting a stronger profit for the summer than analysts expected, though its revenue was weaker than forecast.

The global tide against AI stocks knocked Nvidia down 1.8%. Because it's the largest stock on Wall Street by total value, the chip giant was the heaviest single weight on the S&P 500.

CoreWeave, which has borrowed money to buy Nvidia's AI chips that it rents out to customers over the cloud, has been particularly shaky in recent weeks because of worries about its debt. It dropped 3.6%, though it's swung between gains and losses of roughly 4% in each of the last two days.

The weakness for AI and other tech stocks began in Asia, where South Korea's Kospi tumbled 3.5%, Hong Kong's Hang Seng dropped 3% and Japan's Nikkei 225 sank 2.7%.

Also weighing on global stock markets was a jump in oil prices.

The price for a barrel of Brent crude oil rose 3.3% to $112.38 after touching its highest level in five months. It's at the high end of the $97 to $112 range it's been yo-yoing through in October on uncertainty about when the war with Iran will allow the global energy industry to return to normal.

In Europe, France's CAC 40 stock index fell to one of the continent's sharpest losses with a drop of 1% It has fewer tech stocks than Asian or U.S. indexes, but it was hurt by another jump in yields for French government bonds.

Yields have been generally climbing there because of worries about the government's big debt load and strained budget. Violent protests across France have raised pressure on the government to increase spending, which could add further to its debt.

Worries about big debt affect almost every developed economy in the world, including the United States. Such concerns have pushed yields in the U.S. bond market to their highest levels in decades, along with high inflation, signals of a still-strong U.S. economy and other factors.

But yields nevertheless fell Thursday in a signal that investors were buying government bonds in search of something safer to own as AI stocks tumble.

The yield on the 10-year Treasury fell to 5.05% from 5.13% late Wednesday and from more than 5.30% earlier this month. That's a notable move for the bond market, though the 10-year yield remains well above its 3.97% level from before the war with Iran.

Thursday's drop in yields came even as another report suggested the economy may be doing better than economists expected. It said fewer workers applied for unemployment benefits last week, which could be a signal that layoffs remain low across the country.

That solid economy has helped companies broadly to make bigger profits, which is what allowed the stock market to hit its record high earlier this month despite the many worries tugging at it.

Procter & Gamble, Lockheed Martin and CSX are among the latest companies to join the list of those topping profit expectations for the summer, and gains for their stocks helped limit the market's losses on Thursday.

CEO Shailesh Jejurikar said Thursday that Procter & Gamble expects "geopolitical and economic challenges" to continue, but it stood by its forecasts for growth in revenue, profit and other measures for the full year. The stock price for the company behind the Crest, Olay and Oral-B brands rose 5.3%.

Contributing: Elaine Kurtenbach

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