U.S. stocks hit records despite AI-led tech slide

On Thursday, the S&P 500 and Dow Jones Industrial Average achieved remarkable new closing records, showcasing a strong performance in the U.S. stock market. The Russell 2000 index followed suit, reaching a new high as well, all buoyed by the recent quarter-point interest rate cut from the Federal Reserve. However, a closer look at the stock movements reveals a more complicated scenario within the tech sector, particularly concerning AI-related companies. Oracle's shares suffered a significant drop of nearly 11% after the company reported disappointing quarterly revenue figures. This decline had a ripple effect on other major players in the AI space, including Nvidia and Micron, which also saw their stock prices decline in after-hours trading. Additionally, Broadcom's shares fell 4.5% despite the company exceeding Wall Street's earnings expectations. Concerns regarding Google's potential shift to in-house chip production added to the uncertainty, particularly as rising memory prices are expected to put pressure on margins. As a result, the tech-heavy Nasdaq Composite experienced a decline of 0.26%, contrasting with the record-setting performance of other major U.S. indexes. This suggests a notable rotation of investor interest away from technology stocks into other sectors. For instance, the financial sector within the S&P 500 reached a new record, driven largely by gains from Visa and Mastercard. Despite the scrutiny facing AI stocks, other sectors are thriving, reflecting a robust U.S. economy as indicated by Fed officials. As long as no unforeseen challenges arise, the market appears poised for a successful holiday season ahead. In related news, Disney has announced a $1 billion investment in OpenAI, allowing the use of its copyrighted characters in Sora, OpenAI's video generator. Furthermore, Elon Musk confirmed that SpaceX is planning an IPO in 2026, although he disputed claims regarding the company's $800 billion valuation. Meanwhile, Broadcom reported strong financial results, with net income nearly doubling year-over-year, even as its shares dropped in extended trading. Analysts are now reassessing their price targets for Oracle following its lackluster earnings report, while major fund houses are noticing significant opportunities in India's growing market for asset management.