A fresh wave of selling in AI-linked stocks pulled global markets lower this week, with the Nasdaq composite tumbling 2.6% on its worst day since July, even as oil prices climbed to their highest level since May on fears that the war with Iran could further disrupt crude supply.
The S&P 500 fell 1.2% on the session, its steepest drop in months, while the damage was concentrated almost entirely in technology: the broader market actually saw more stocks rise than fall, and the Dow Jones Industrial Average eked out a gain of less than 0.1%. Nvidia, the largest company on Wall Street by market value, fell 4.4% and single-handedly accounted for much of the index's decline given its outsized weighting.
Strong Earnings, Falling Share Prices
What made the selloff notable was how many of the stocks involved had just reported results that beat expectations. Lam Research, whose equipment helps manufacture semiconductors, posted stronger profit and revenue than analysts forecast for the summer — and its shares still fell 11.8%. Meta Platforms lost 7% of its value, erasing tens of billions of dollars in market capitalization, despite reporting stronger revenue than expected for its Muse AI push; its profit fell short of estimates, and the company separately announced it would create a new class of stock to help fund further AI investment. Tesla fell 3.1% even after posting a stronger-than-expected summer profit, as its revenue missed forecasts. CoreWeave, which has borrowed heavily to buy Nvidia chips it rents out over the cloud, dropped 10.1% amid lingering worries about its debt load.
The selling started in Asia, where South Korea's Kospi tumbled 3.5%, Hong Kong's Hang Seng fell 3%, and Japan's Nikkei 225 sank 2.7%, before spreading to U.S. markets. The common thread across the rout is a market increasingly questioning whether it has become too expensive to keep borrowing money to build AI datacenters and buy chips, even as the underlying companies continue to report real growth.
A Separate Squeeze From Energy
Compounding the pressure on investor sentiment, Brent crude touched its highest level in roughly five months this week as attacks on tankers near the Strait of Hormuz and on Saudi oil infrastructure raised fresh fears about a wider Gulf conflict. Higher energy costs threaten to feed into inflation at a moment when markets are already nervous about borrowing costs, giving investors a second reason, beyond AI valuations alone, to pull back from riskier assets. With earnings season still underway, traders are bracing for more of the same pattern seen this week: solid fundamentals colliding with a market that has grown anxious about how much further AI-related spending, and AI-related stock prices, can run.