US and Canadian stock markets experienced a notable downturn on Thursday, largely driven by investor concerns over the disruptive potential of artificial intelligence. The S&P 500 dropped 1.6%, the Dow Jones Industrial Average fell 1.3%, and the Nasdaq composite lost 2%. Companies like Cisco Systems and AppLovin saw significant declines, with Cisco down 12.3% and AppLovin tumbling 19.7% due to fears of AI competition and rising memory costs. Canada's S&P/TSX composite index also fell 2.4%, with technology stocks down 3.7% and Shopify Inc. losing 6.1%.
Despite widespread market apprehension, several companies demonstrated strong performance linked to AI. Equinix jumped 12.5% as demand for its AI data centers surged, projecting annual revenue for 2026 between $10.12 billion and $10.22 billion. Lenovo's revenue soared 18% to $22.2 billion in its third fiscal quarter, with its Infrastructure Solutions Group, handling AI data centers, growing 31% to $5.2 billion. EssilorLuxottica also saw sales increase, selling over 7 million AI glasses in 2025, which added 6-7% to its revenue.
Major tech players are committing substantial resources to AI. Alphabet, Google's parent company, plans to spend $180 billion on AI in 2026, while Amazon will invest $200 billion in 2026 for AWS. Microsoft aims to increase its AI capacity by over 80%. These investments are benefiting suppliers like Taiwan Semiconductor Manufacturing (TSMC) and Applied Digital, which secured a $5 billion deal for AI infrastructure. Nvidia remains a dominant force, preparing to launch its new Rubin chip platform to enhance AI inference and recently acquiring Groq's assets in a $20 billion deal.
The AI sector also saw significant activity in China, with several companies launching new models. Hong Kong-listed Zhipu AI surged 30% after unveiling its GLM-4 large language model and a new M2 model. MiniMax shares jumped 11%, and DeepSeek and Ant Group also released upgraded AI models. Meanwhile, Palantir Technologies continues to develop custom AI software for clients, positioning itself as a strong long-term AI stock. UBS strategists have warned that AI disruption could extend its impact to bond markets, while some analysts view the drop in financial stocks like Charles Schwab as a buying opportunity, believing AI will augment rather than replace financial professionals.
Key Takeaways
- US and Canadian stock markets fell sharply, with the S&P 500 dropping 1.6% and the S&P/TSX composite index falling 2.4%, due to investor fears about AI disruption.
- Companies like Cisco Systems (down 12.3%), AppLovin (down 19.7%), and Shopify Inc. (down 6.1%) experienced significant declines amid AI competition concerns.
- Equinix saw its shares jump 12.5% and projected higher 2026 revenue ($10.12-$10.22 billion) due to strong demand for its AI data centers.
- Lenovo's revenue increased 18% to $22.2 billion, driven by AI products, with its Infrastructure Solutions Group growing 31% to $5.2 billion.
- Nvidia continues to lead the AI chip market, preparing to launch its Rubin chip platform and acquiring Groq's assets in a $20 billion deal.
- Major tech companies like Alphabet ($180 billion), Amazon ($200 billion for AWS), and Microsoft (80% AI capacity increase) are making massive AI investments.
- Chinese AI stocks rallied, with Zhipu AI surging 30% and MiniMax jumping 11% following new model releases from Zhipu AI (GLM-4, M2), DeepSeek, and Ant Group.
- EssilorLuxottica's sales were boosted by over 7 million AI glasses sold in 2025, contributing 6-7% to revenue, despite initial impacts on profit margins.
- Financial stocks like Charles Schwab (down over 10%) dropped due to fears of AI automating advisor tasks, though some analysts see this as a buying opportunity.
- Palantir Technologies is highlighted as a strong long-term AI stock due to its custom AI software development for various clients.
US Stocks Drop as AI Worries Hit Tech Companies
US stocks fell sharply on Thursday as investors sold shares of companies they believe will lose out from artificial intelligence technology. The S&P 500 dropped 1.6%, the Dow Jones Industrial Average fell 1.3%, and the Nasdaq composite lost 2%. Cisco Systems saw an 11.6% drop, and AppLovin tumbled 18.3% due to AI competition fears. However, Equinix jumped 10.9% as demand for its AI data centers grew. UBS strategists also warned that AI disruption could affect bond markets.
AI Fears Cause Sharp Stock Market Decline
Stocks fell sharply on Thursday as investors worried about companies that might be hurt by artificial intelligence. The S&P 500 index dropped 1.6%, the Dow Jones industrial average fell 1.3%, and the Nasdaq composite lost 2%. AppLovin tumbled 19.7% and Cisco Systems dropped 12.3% despite good earnings, as AI competition and higher memory costs raised concerns. UBS strategists warned that AI disruption could also affect bond prices. However, Equinix jumped 10.4% due to high demand for its AI data centers, and McDonald's and Walmart also saw gains.
Canadian Stocks Drop Amid AI Worries and Rate Cut Doubts
Canada's main stock index, the S&P/TSX composite index, fell 2.4% on Thursday. Investors worried about how artificial intelligence might disrupt businesses and if the Federal Reserve would cut interest rates less than expected. Industrial, metal mining, and energy shares saw significant drops. Technology stocks also fell 3.7%, with Shopify Inc down 6.1%. Cisco Systems closed 12.3% lower, and transportation companies like CH Robinson also tumbled due to AI disruption fears. AppLovin lost 19.7% as well, reflecting widespread concerns about AI's impact.
US Stocks Fall as Investors Weigh AI Impact
US stocks fell on Thursday as investors tried to figure out which companies would benefit and which would suffer from artificial intelligence. The S&P 500 dropped 1.1%. AppLovin tumbled 18.3% and Cisco Systems fell 11.6% due to concerns about AI competition and rising memory costs. In contrast, Equinix jumped 12.5% because of high demand for its AI data centers. McDonald's and Walmart also saw gains. Treasury yields fell ahead of Friday's inflation report, which economists expect to show a slowdown to 2.5%.
Nvidia Leads AI Chip Market with New Rubin Platform
Nvidia remains the top company for GPU chips used in artificial intelligence data centers. The company is preparing to launch its new Rubin chip platform, which will improve AI inference with its Inference Context Memory Storage technology. Nvidia also recently bought Groq's assets in a $20 billion deal to boost its AI inference chip technology. Analysts predict Nvidia's earnings will grow 37% each year. The company's strong position and constant innovation make it a key player in the growing AI market.
Top 5 AI Stocks to Consider for Long Term Growth
Five companies are highlighted as strong artificial intelligence stocks to hold for the next decade. Netflix uses AI for content recommendations and ads, and plans to acquire Warner Bros. studios for $82.7 billion. Nvidia leads in AI chips and will launch its Rubin chip platform for advanced AI inference. Alphabet, Google's parent company, has a full AI system and plans to spend $180 billion on AI in 2026. Amazon's AWS is a top cloud provider, investing $200 billion in 2026. Finally, Palantir Technologies develops custom AI software for various clients, showing strong growth.
Equinix Predicts Higher Sales Due to AI Data Center Boom
Equinix expects its annual revenue for 2026 to be between $10.12 billion and $10.22 billion, which is higher than what experts predicted. The company's shares rose over 6% after this announcement. This positive outlook comes from the strong demand for its data center services, driven by the growing need for artificial intelligence. AI workloads require powerful data centers with good infrastructure, cooling, and connections. Equinix, with its global network and focus on interconnection services, is well-positioned to benefit from this trend.
Financial Stocks Drop on AI Fears Analysts See Buying Chance
Fears about artificial intelligence have caused financial stocks like Charles Schwab, LPL Financial, and Ameriprise Financial to drop. Charles Schwab's stock fell over 10%, LPL Financial's over 15%, and Ameriprise Financial's over 12%. Investors worry that AI might automate tasks currently done by financial advisors, leading to less revenue. However, some analysts believe these fears are too strong and see this as a chance to buy these stocks. They argue that AI will likely help financial professionals rather than replace them, making these companies strong long-term investments.
Big Tech Stocks Fall as AI Spending Boosts Suppliers
Stocks for Amazon, Microsoft, and Alphabet dropped due to investor concerns about their huge spending on artificial intelligence. Alphabet plans to spend $180 billion in 2026, Microsoft aims to increase AI capacity by over 80%, and Amazon will invest $200 billion in 2026. However, three supplier companies are expected to benefit greatly from this spending. Taiwan Semiconductor Manufacturing (TSMC) is increasing its production, and Nvidia remains the top provider of powerful AI chips. Applied Digital, which now focuses on AI infrastructure, has secured a $5 billion deal and saw sales jump 250% in fiscal Q2 2026.
Chinese AI Stocks Soar with New Model Releases
Chinese artificial intelligence stocks rallied on Thursday as several companies launched new and improved AI models. Hong Kong-listed Zhipu AI, also known as Knowledge Atlas Technology, surged 30%. MiniMax shares jumped 11%, and the Shanghai STAR AI Industry Index climbed 1.7%. Zhipu AI unveiled its latest large language model, GLM-4, and a new model called M2. DeepSeek and Ant Group also released upgraded AI models. Companies like UCloud Tech and SenseTime, which support AI development, also saw their shares rise significantly.
Lenovo Revenue Jumps 18 Percent Driven by AI Products
Lenovo's revenue soared 18% to $22.2 billion in its third fiscal quarter, largely driven by its artificial intelligence products. All major business groups saw strong double-digit growth. The Infrastructure Solutions Group, which handles AI data centers, grew 31% to $5.2 billion due to high demand for AI servers. The Intelligent Devices Group also benefited from AI-enabled personal computers. While net profit after tax fell 21% to $546 million due to one-time restructuring costs, Chairman and CEO Yuanqing Yang emphasized the company's successful shift to hybrid AI.
EssilorLuxottica Sales Boosted by AI Glasses
EssilorLuxottica saw its sales increase, thanks to new products like AI glasses and solutions for myopia and mild hearing loss. The company sold over 7 million AI glasses in 2025, which added 6-7% to its revenue. However, these AI glasses also lowered the company's profit margins due to their lower profit and initial investments. EssilorLuxottica now expects stable margins for the next five years, changing its earlier goal for higher operating margins. Analysts believe the shares are currently expensive, but expect margins to improve as AI glasses sales grow.
Tech Stocks Fall Again as AI Concerns Continue
US stocks dropped sharply on Thursday, marking the third straight day of losses for the S&P 500. Major indexes, including the Dow Jones and Nasdaq, fell over 1% by midday. The tech sector, especially software and memory stocks, saw the biggest declines. Investors remain worried about the impact of artificial intelligence, despite a brief rally earlier in the week. Jose Torres, an economist at Interactive Brokers, noted that fading AI hopes combined with weak economic reports are affecting the market. Rosenberg Research also pointed to AI's potential to pressure pricing power for software companies.
Sources
- US stocks fall sharply as investors punish companies seen as losers from AI
- Stocks drop sharply as investors hunt for losers that will be hurt by AI
- TSX falls as tech, commodities drag
- US stocks drift as investors try to separate AI winners from losers
- Got $200? 1 Artificial Intelligence (AI) Stock to Buy and Hold for the Long Term.
- 5 Artificial Intelligence Stocks You Can Buy and Hold for the Next Decade
- Equinix forecasts annual sales above estimates on AI data center demand
- AI Fears Hit Charles Schwab and Other Financial Stocks. The Case for Buying Now.
- Amazon, Microsoft, and Alphabet Stocks Plummet on AI Investments. These 3 Stocks Are Set to Win.
- Zhipu leads rally in Chinese AI stocks, surging 30%, as a wave of new releases hits market
- Lenovo Revenue Soars 18% to $22.2B as AI Products Drive Record Growth
- EssilorLuxottica Earnings: AI Glasses Accelerate Sales but Weigh on Margins; Shares Rich
- Stock market today: Software, memory stocks tank as AI worries flare again
Comments
Please log in to post a comment.