Tech Titans Tumble: Wall Street's AI Rally Cools

The S&P 500 and Nasdaq faced significant losses, driven by Nvidia's 8.5% drop following a mild quarterly report. Concerns about AI overcapacity and a stalling U.S. economy further dampened the markets. As technology stocks dipped, crude price hikes buoyed the energy sector. Inflation and growth fears challenge major indexes.

The technology sector took a hit as the S&P 500 and Nasdaq closed sharply lower on Thursday, primarily due to Nvidia's disappointing quarterly report, which saw a dramatic 8.5% drop in the company's stock, wiping out $274 billion in market value. Investors' concerns revolve around a cooling U.S. economy and potential AI overcapacity.

Nvidia's underwhelming forecast overshadowed any positive revenue outlook, causing unease among those with high expectations for the company's earnings. Meanwhile, chipmakers like Broadcom and Advanced Micro Devices also saw declines, contributing to a 6.1% drop in the Philadelphia chip index. The recent debut of cost-effective AI models from China's DeepSeek has further cooled Wall Street's AI enthusiasm.

As the tech sector struggled, other areas like energy saw gains, with the S&P energy index climbing 0.5% amid rising crude prices. President Trump's cancellation of Chevron's license in Venezuela partly fueled this increase. Reports indicating slowed economic growth and a rise in jobless claims have added to the stock market jitters, shifting inflation concerns to growth fears.