U.S. stocks fell on Thursday after investors reacted cautiously to earnings from technology heavyweights, with losses in semiconductor shares dragging major indexes lower despite solid corporate results.
The benchmark S&P 500 dropped about 1.1 percent, while the tech-heavy Nasdaq Composite declined 1.9 percent. The Dow Jones Industrial Average also slipped, losing roughly 170 points.
Shares of chipmaker Nvidia fell around five percent, even after the company reported better-than-expected fourth-quarter earnings and revenue. The decline marked the stock’s steepest single-day drop since April and weighed heavily on the broader technology sector.
Other semiconductor firms followed Nvidia lower, reflecting investor concerns that expectations surrounding artificial intelligence-driven growth may already be priced into valuations.
Market sentiment was also mixed following results from cloud software firm Salesforce. Its shares rose about two percent after beating profit and revenue forecasts, though gains were limited by weaker-than-expected long-term revenue guidance.
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Analysts said uncertainty surrounding the rapid evolution of artificial intelligence tools continues to pressure traditional software companies, as investors reassess future competitiveness within the sector.
Despite the broader market decline, parts of the technology space showed resilience. The iShares Expanded Tech-Software Sector ETF posted modest gains, although the fund remains significantly below its recent peak levels.
Financial and real estate stocks provided some support to markets, with banking giant JPMorgan Chase and property services firm CBRE Group recording moderate advances during the session.
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Thursday’s pullback follows a recent rebound in U.S. equities, highlighting ongoing volatility as investors balance strong corporate earnings against concerns over interest rates, valuations and the disruptive impact of artificial intelligence across industries.
Market analysts noted that while earnings remain broadly healthy, investor expectations for AI-linked companies particularly semiconductor leaders have risen sharply, leaving little room for disappointment even when results exceed forecasts.
The latest market moves underscore how sensitive global equities remain to developments in the technology sector, which continues to play an outsized role in shaping investor confidence and broader market direction.
Global equity markets have remained highly sensitive to developments in the technology sector over the past two years, largely driven by investor enthusiasm surrounding artificial intelligence (AI). Companies linked to AI infrastructure particularly semiconductor manufacturers have recorded sharp valuation gains as demand for advanced computing power surged worldwide.
Leading this rally has been Nvidia, whose graphics processing units (GPUs) are widely used in AI data centres, cloud computing and machine learning applications. The company’s rapid revenue growth has positioned it at the centre of the global AI investment boom, making its earnings reports a major driver of market sentiment.
However, analysts say elevated expectations have increased market volatility. Even strong earnings performances have occasionally triggered sell-offs as investors reassess whether future growth can justify already high stock prices.
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At the same time, traditional software companies such as Salesforce are facing growing uncertainty as generative AI tools reshape enterprise technology markets. Investors increasingly worry that new AI platforms could disrupt established business models, prompting cautious outlooks despite solid near-term financial performance.
The broader U.S. market measured by benchmarks such as the S&P 500 and the Nasdaq Composite has therefore experienced periods of sharp swings in recent months, reflecting shifting expectations about AI profitability, interest rate policy and global economic growth.
Market participants also remain attentive to monetary policy signals from the U.S. Federal Reserve, as borrowing costs continue to influence investment flows into high-growth technology stocks. Higher interest rates typically reduce appetite for riskier assets, particularly companies whose valuations depend heavily on future earnings potential.
Against this backdrop, earnings announcements from major technology firms have taken on heightened importance, often determining short-term market direction as investors weigh optimism over AI-led productivity gains against concerns about sustainability, competition and valuation risks.
