Technology stocks pulled major US indexes lower on Thursday as Taiwan Semiconductor Manufacturing Co.'s (TSMC) results heightened worries about artificial intelligence (AI) spending. While TSMC reported a record Q2 with revenue up 33.7% to $40.2 billion and net profit jumping 77.4% to about $22.4 billion, and raised its full-year capital expenditure (capex) outlook to between $60 billion and $64 billion, shares of other chipmakers declined. This increased capex, signaling confidence in chip and data center demand through 2027, ironically triggered investor anxiety about the rising costs of AI infrastructure.
The widespread concern over AI-related capital spending led the Nasdaq-100 Index to decline 1.6% and the S&P 500 Index to drop 0.5%. American depositary receipts for TSMC were down, and peers like Micron Technology Inc., Marvell Technology Inc., and Nvidia Corp. also saw declines. The Philadelphia Stock Exchange Semiconductor Index fell 4.3%, with Arm Holdings (ARM) dropping 4% and Intel (INTC) sliding 2.8%. Matt Maley of Miller Tabak + Co. noted that the market's initial response to TSMC's positive results and guidance was a "sell the news" reaction, partly due to the higher spending plans.
In related market movements, Alphabet Inc. dropped 4.4%, losing $200 billion in market capitalization, following a Bloomberg report that Google is behind schedule on its Gemini 3.5 Pro AI model. Meanwhile, UnitedHealth Group Inc. (UNH) provided some lift to the Dow, as its shares gained after the health conglomerate raised its full-year outlook and surpassed quarterly profit expectations. The S&P 500 Equal Weighted Index, which gives equal weight to all its constituents, climbed 1% to reach an all-time high, outperforming the S&P 500. This suggests that while big tech struggled, the broader market showed resilience, with some analysts noting that recent corrections have made many AI-related stocks relatively inexpensive.
