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Nasdaq Drops 1.25% as AI Growth Concerns Weigh on Technology Stocks

BearishMedium impact
IXIC27,193.34 −1.25%

The NASDAQ Composite Index (NASDAQ:IXIC) declined 1.25% on Thursday to close at 27,193.34, led lower by a selloff in major semiconductor and artificial intelligence stocks. While tech giants like Nvidia (NVDA), Broadcom (AVGO), and Micron (MU) experienced notable losses, the broader market remained resilient, as approximately two-thirds of the S&P 500 index constituents advanced.

The pullback was sparked by reports that OpenAI's annualized revenue is approaching $50 billion, which fell short of the $70 billion figure previously discussed in the market. Although accounting differences involving cloud-partner sales make direct comparisons complex, the news raised questions about the near-term pace of AI expansion. Further dampening sentiment, Nvidia-backed data-center operator Firmus shelved its proposed $5 billion initial public offering in favor of private capital, demonstrating that investor demand has limits at higher valuations.

Looking ahead, investors are focusing on upcoming consumer sentiment data and corporate guidance to gauge economic health. The preliminary consumer sentiment reading from the University of Michigan is expected to land at 47.5, down from 48.1, with inflation expectations being highly relevant. Additionally, market participants are monitoring interest rate expectations, with traders pricing in an 83% probability of a Federal Reserve rate hike in December.

Key points

  • The Nasdaq Composite fell 1.25% to close at 27,193.34, driven down by major technology and chip stocks.
  • OpenAI reported annualized revenue approaching $50 billion, coming in below the previously rumored $70 billion figure.
  • Nvidia-backed data-center operator Firmus cancelled its proposed $5 billion IPO to pursue private funding instead.
  • Despite the tech-led index decline, approximately two-thirds of the stocks in the S&P 500 finished the session higher.

Written by our AI from expert market sources across the web. It can contain mistakes: check the facts before acting on them. Write-ups powered by the free AI API at FreeTheAI.org

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Questions and answers

Why did the Nasdaq Composite drop on Thursday?

The Nasdaq Composite fell 1.25% due to a selloff in major chip and artificial intelligence stocks, triggered by lower-than-expected revenue figures from OpenAI and a shelved data-center IPO.

What was the revenue miss reported for OpenAI?

OpenAI reported annualized revenue approaching $50 billion, which fell short of the $70 billion figure previously circulated in the market, raising concerns about the pace of AI growth.

Why did Firmus cancel its initial public offering?

The Nvidia-backed data-center operator shelved its proposed $5 billion IPO to pursue private capital instead, signaling that investor enthusiasm has limits at triple its previous valuation.