US STOCKS-Nasdaq underperforms S&P 500, Dow as AI growth worries hit tech stocks

The Nasdaq ‌Composite ​fell on Tuesday, underperforming the benchmark S&P 500 and the blue-chip Dow, as investors questioned whether the artificial intelligence boom can deliver meaningful growth for tech stocks. The Wall Street Journal reported that AI heavyweight OpenAI had missed internal targets for weekly users and revenue, raising concerns over the ChatGPT parent's ‌ability to support its massive spending on data centers.

The Nasdaq ‌Composite ​fell on Tuesday, underperforming the benchmark S&P 500 and the blue-chip Dow, as investors questioned whether the artificial intelligence boom can deliver meaningful growth for tech stocks.

The Wall Street Journal reported that AI heavyweight OpenAI had missed internal targets for weekly users and revenue, raising concerns over the ChatGPT parent's ‌ability to support its massive spending on data centers. "That's putting pressure on the Nasdaq and on the S&P because tech and communication services make up about 40% of the benchmark," said Art Hogan, chief market strategist at B Riley Wealth.

"If OpenAI is seeing some degradation, that will shuffle the deck a bit in terms of what the leadership looks like." Although the company is privately held, its fortunes are closely tied ‌to several major technology stocks. Its financial performance is often viewed as a gauge of AI demand and could have wide-ranging implications for public equity markets.

Shares of Oracle, whose reliance on OpenAI ‌for its cloud computing ambitions has been under scrutiny, fell 2.9%. Chip stocks also dropped, with Nvidia, AMD and Arm Holdings down 2.4%, 3.5% and 6.3%, respectively. Nvidia-backed CoreWeave slid 2%.

"Any misstep involving AI-related demand or capital budget expenditures from one of the four Magnificent 7 companies reporting Wednesday could easily give this market second thoughts about how far it has run in the past month," wrote Dennis Follmer, chief investment officer at Montis Financial. The S&P 500 information technology sector slipped 1.3%, the biggest laggard ⁠on the benchmark. ​Six of the eleven major S&P sectors were in ⁠the red.

At 09:59 a.m. ET, the Dow Jones Industrial Average rose 57.59 points, or 0.12%, to 49,225.38, the S&P 500 lost 33.41 points, or 0.47%, to 7,140.50 and the Nasdaq Composite lost 196.43 points, or 0.79%, to 24,690.67. MIDDLE EAST STALEMATE WEIGHS ⁠ON SENTIMENT

The U.S.-Iran war remains an overhang on equities, shaping market sentiment even during the busiest week of the corporate earnings season this quarter. There are mounting concerns that the impasse in negotiations could keep oil prices ​elevated for longer. A U.S. official said President Donald Trump was unhappy with the latest Iranian proposal on resolving the conflict in the Middle East, pouring cold water on hopes for a ⁠deal that had sent the S&P 500, the Nasdaq 100, and the Nasdaq Composite to record highs in recent days.

"While the U.S. is more strongly positioned to withstand an extended closure of the Strait of Hormuz, the global economy would struggle, and that will ⁠eventually ​ripple back to take a bite out of earnings and stock prices in the U.S.," wrote Follmer. In a fresh blow to oil exporting countries, the United Arab Emirates said on Tuesday it was quitting the oil producers' group OPEC.

Oil prices are 53% higher than pre-war levels as the crucial shipping route through the Strait of Hormuz remains disrupted. Brent crude futures topped $110 a barrel for the first time ⁠in three weeks. Meanwhile, investors are also scrutinizing earnings from a bunch of corporate giants on Tuesday.

United Parcel Service dipped 5.7% premarket after the logistics firm reported a sharp drop in quarterly adjusted profit. General ⁠Motors lifted its full-year earnings forecast on a resilient ⁠U.S. car market and an expected tariff refund. Shares of the automaker were down 3%.

Coca-Cola climbed 5.5% after the beverage giant lifted its annual adjusted profit forecast. Declining issues outnumbered advancers by a 1.49-to-1 ratio on the NYSE and by a 1.48-to-1 ratio on the Nasdaq.

The S&P 500 posted 3 ‌new 52-week highs and 6 new ‌lows while the Nasdaq Composite recorded 58 new highs and 47 new lows.