AI-Trade Flounders After Tech Earnings, Oil Gains: Markets Wrap
(Bloomberg) — Stocks fell as earnings from megacap companies failed to reassure investors about the durability of the rebound in the artificial intelligence trade this week. Crude oil climbed after tensions flared in the Middle East.
Contracts for the Nasdaq 100 Index slipped 1.1% and those for the S&P 500 dropped 0.5%, following a split set of results from Tesla Inc. and Meta Platforms Inc.
In Asia, the Kospi Index — a barometer for the AI trade — declined 2.2% as chip heavyweights Samsung Electronics Co. and SK Hynix Inc. retreated. China’s CSI 300 Index fell 1.7% and was set for a bear market. Alibaba Group Holding Ltd. led Chinese e-commerce shares lower after the government called for quality control. The broader MSCI Asia Pacific Index lost 1%.
Tesla dropped 3.3% in post-market trading after cutting its capital-spending forecast. Meta Platforms, however, rose 2.2% after hours as the company boosted its bet on AI with spending outlook. Shares of the semiconductor capital equipment company Lam Research Corp. fell 7.4% in extended trading after a weaker-than-expected earnings forecast.
“The market is a hard one to please on capital expenditure right now,” said Tim Waterer, chief market analyst at KCM Trade. “It frets when companies ramp spending, and it frets when they pull it back, as we’ve just seen with Tesla. In this environment, it’s almost impossible to get the balance right.”
Also weighing on the mood, crude oil advanced after deadly attacks in Saudi Arabia heightened concerns that escalating Middle East hostilities could hit supply. Brent climbed 1.5% to trade above $110 a barrel. Gold declined 0.7% to extend its losses this week and trade around $4,110 an ounce. Treasuries and the dollar were little changed.
The latest corporate results will test whether earnings can keep the AI trade on track as investors weigh strong growth against the mounting cost of funding the industry’s expansion. Concerns have grown that heavy spending on data centers and computing capacity may take longer to generate returns, while this year’s blistering stock rally has raised questions about stretched valuations and the risk of an AI bubble.
“Markets are basically telling us we are moving on from trading AI vibes and narrative to now requiring a pretty high bar for what an earnings beat looks like,” Kaanhari Singh, APAC head of equity derivatives sales at Barclays Plc., said on Bloomberg TV. “That’s both in terms of capex forward guidance, but also for the path of monetization.”
What Bloomberg Strategists Say…
“Macro investors may find it tougher to turn optimistic today as there is now a quiet period on tech earnings until Microsoft and Alphabet in the middle of next week. This will put firm oil prices back into the center of attention, especially after US State Department ordered some diplomats out of Saudi Arabia.”
— Mark Cranfield, MLive Strategist. Click here for the full analysis.
Doubts over the economics of the AI boom have rattled markets recently, with shareholders demanding clearer evidence that enormous outlays on infrastructure will eventually pay off.
The repricing has been sharp. The Nasdaq 100 lost 5.5% last week, its steepest weekly decline since President Donald Trump unveiled global tariffs in April 2025. The Philadelphia Semiconductor Index slid for eight consecutive sessions, marking its longest run of losses since October 2008.
Prominent investors have added to the skepticism. Billionaire Ken Griffin said markets are “almost certainly” experiencing an AI bubble as businesses wrestle with investment decisions and the technology’s economic impact. Ray Dalio earlier this month warned that AI is a “classic bubble” that is nearing a bursting point thanks to rising interest rates and the need to turn wealth into cash.
Elsewhere, the Bank of Korea kept its benchmark interest rate unchanged, pausing after a rare back-to-back increase aimed at containing inflation fueled by an unprecedented semiconductor-led economic boom.
Attention is also on the rising tensions in the Middle East and the oil market.
Oil rose following a deadly attack on a Saudi oil field, raising concerns that escalating hostilities in the Middle East could hit supply even as exports through the Strait of Hormuz have accelerated in recent months.
The US State Department issued an ordered departure for non-emergency personnel and their families from Saudi Arabia because of the growing threat from Houthi militants in neighboring Yemen.
The US and Israeli militaries have developed specific plans for renewed strikes against Iran after the American midterm elections, the New York Times reported, citing US officials and other people briefed on the deliberations.
Investors aren’t “comfortable with oil rising above 110,” said Rajeev De Mello, a global macro portfolio manager at Gama Asset Management. “We are regularly making new highs in oil and energy products, which is stagflationary. Implied volatility on oil options is rising once again reflecting uncertainty about the future path of energy as we approach the Northern Hemisphere winter.”
Corporate Highlights:
Texas Instruments Inc., the biggest maker of analog and embedded processing chips, gave a strong revenue forecast for the current period, lifted by demand from automotive and industrial customers. International Business Machines Corp. reported sales that topped analysts’ estimates, saying it had recovered most of the infrastructure deals that were delayed earlier this year. Intel Corp. touted progress with its long-delayed US factory expansion, saying it was finishing up a plant in Arizona and making headway on the chipmaker’s newest site in Ohio. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.5% as of 11:59 a.m. Tokyo time Japan’s Topix fell 0.3% Australia’s S&P/ASX 200 fell 0.4% Hong Kong’s Hang Seng fell 2.6% The Shanghai Composite fell 1.3% Euro Stoxx 50 futures fell 0.6% Currencies
The Bloomberg Dollar Spot Index was little changed The euro rose 0.1% to $1.1244 The Japanese yen rose 0.2% to 157.88 per dollar The offshore yuan was little changed at 6.6740 per dollar Cryptocurrencies
Bitcoin fell 2.1% to $82,849.18 Ether fell 2% to $2,440.02 Bonds
The yield on 10-year Treasuries declined four basis points to 5.08% Japan’s 10-year yield was unchanged at 2.885% Australia’s 10-year yield declined two basis points to 5.26% Commodities
West Texas Intermediate crude rose 1.3% to $98.38 a barrel Spot gold fell 0.6% to $4,116.17 an ounce This story was produced with the assistance of Bloomberg Automation.
©2026 Bloomberg L.P.
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