The New York Stock Exchange opened lower, reflecting investor anxiety about the overall AI industry. Technology stocks in general were particularly under pressure after related companies' earnings reports fell short of expectations.
As of 10:29 a.m. on the 12th (local time), the Dow Jones Industrial Average fell 0.04% from the previous day to 48,684.02. The Standard & Poor's 500 Index fell 0.73% to 6,850.48, and the tech-heavy Nasdaq Composite Index fell 1.20% to 23,310.08. The decline was driven by disappointing earnings outlooks, particularly for artificial intelligence-related stocks.
The immediate trigger for investor concerns was Broadcom's earnings announcement. The company, along with Nvidia, is considered a leading AI beneficiary in the semiconductor and communications equipment sectors. However, its recently released revenue outlook for the fourth quarter of fiscal year 2025 and beyond fell short of expectations. Broadcom CEO Hock Tan highlighted the stagnation of non-AI revenue while the low gross margins of its fast-growing AI business. Indeed, the company announced a backlog of $73 billion worth of AI products over the next six quarters, but this fell short of market expectations, and its stock price plummeted by over 8% in a single day.
Before Broadcom, Oracle also shook investor confidence by downplaying AI expectations after its earnings release. This led to a series of declines in AI stocks, including Palantir. Some analysts interpreted this trend as coinciding with the investor trend of moving away from high-interest-rate environments. They concluded that funds are shifting from growth-focused technology stocks to value stocks that stand to benefit from lower interest rates.
By sector, technology, telecommunications, and energy sectors underperformed, while financial, consumer goods, and real estate stocks rose. Individually, shares of Lululemon Athletica surged nearly 10% following CEO Calvin MacDonald's resignation, while Tilray Brands soared over 24%, reflecting expectations for cannabis-related policies. Luxury furniture company RH rose 11%, outperforming its peers.
Meanwhile, major European stock markets showed mixed performance. France's CAC 40 and Germany's DAX rose 0.51% and 0.16%, respectively, while the Euro STOXX 50 and the UK's FTSE 100 declined slightly. International oil prices also fell, with West Texas Intermediate (WTI) crude oil for January 2026 delivery falling 0.38% to $57.38 per barrel.
This trend can be interpreted as a signal that short-term growth expectations for the AI industry are being adjusted. As investors focus on more realistic profitability and margin structures, a full-scale sifting through AI stocks is likely to begin. If the correction in technology stocks continues, capital flows are expected to shift to traditional sectors focused on value stocks for the time being.
Get real-time news... Go to TokenPost Telegram
Copyright ยฉ TokenPost. Unauthorized reproduction and redistribution prohibited.
