Wall Street falls sharply as AI companies face profit concerns

Summarised from 2 outlets · Updated 18 Oct, 21:31 · Archive

US stock markets closed sharply lower on Friday, with AI-related technology stocks under pressure amid concerns about debt-laden companies' profitability.

Wall Street closed sharply lower on Friday, with the Nasdaq falling 572.99 points, or 2.15 per cent, to 26,137.85, and the S&P 500 losing 85.44 points, or 1.10 per cent, to 7,658.62. The Dow Jones Industrial Average fell 189.01 points, or 0.36 per cent, to 51,990.05.

AI-related technology stocks were under particular pressure. CoreWeave, which is backed by Nvidia, slumped as its bonds sold off sharply during the week, pushing yields above 15 per cent. Broadcom also fell, and the PHLX chip index fell for an eighth consecutive day. Investors were concerned that debt-laden AI infrastructure companies may not turn profits in time to repay debts, particularly as borrowing costs are expected to rise.

Oil prices jumped more than three per cent on Friday due to Middle East supply worries, spooking traders heading into the weekend. Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle, said: 'There is some fear in the market. High oil prices, in particular, tend to weigh on the price/earnings multiple of stocks, and so I think you have investors looking to be cautious into the weekend rather than take more risk.'

Concerns around AI financing extended to private companies, with some current and prospective investors weighing a lower valuation for Anthropic in its upcoming IPO, Reuters reported. Third-quarter earnings season begins next week with reports from Tesla, Meta Platforms and Procter & Gamble, with analysts expecting quarterly earnings to surge more than 30 per cent driven by AI-related megacaps.

Wall Street falls sharply as AI companies face profit concerns — Image: The West Australian

Comments (0)

How it is being reported

Wall Street closes sharply lower as AI worries weighUS stocks have closed lower with AI wobbles offset by big bank gains.The West Australian · 18 Oct, 21:02
Wall Street closes sharply lower as AI worries weighUS stocks have closed lower with AI wobbles offset by big bank gains.Perth Now · 18 Oct, 21:01

In this story: CoreWeave · Broadcom · Nvidia · Anthropic · Tesla · Meta Platforms · Procter & Gamble · US Bank Wealth Management

This summary was written by AI from the headlines and standfirsts above, and states as fact only what at least two outlets report. How we use AI · Report a problem