Oil drops, stocks mostly higher despite AI concerns

Oil prices and the dollar retreated Thursday as traders tracked conflicting developments in the Middle East war, while equity markets mostly rose despite a disappointing outlook from US chipmaker Broadcom weighing upon AI stocks.

Iran reported “no tangible progress” in negotiations on ending the war, even as the US House of Representatives passed a resolution seeking to halt American military action.

Israel meanwhile struck south Lebanon and threatened new attacks on Beirut despite an announcement earlier that the opposing sides had agreed to implement a conditional ceasefire.

Elsewhere, a disappointing forecast by chip giant Broadcom stoked concerns about AI stock valuations, which have soared in recent months and helped push equity indexes to record highs.

Broadcom’s stock closed 12.6 percent lower, amid revived “doubts about the actual growth rates for artificial intelligence,” said John Plassard at Cite Gestion.

While Broadcom and other AI stocks weighed down the Nasdaq, the Dow rallied to a new high on Thursday, jumping 1.7 percent to 51,561.93.

“You can make the case that some of these semiconductor companies are priced for perfection,” said Angelo Kourkafas of Edward Jones. “When the bar of expectations gets so high, it becomes harder to beat it and exceed it.”

Oil falls as Lebanon and Israel agree to implement ceasefire

He added that even as investors appear to be taking some profits after strong moves in many semiconductor stocks, “I don’t see anything that necessarily changes the narrative around AI.”

“The demand continues and remains strong based on everything we hear,” he said.

Investors also braced for a coming IPO by Elon Musk’s SpaceX, the rockets-to-AI behemoth that is aiming to raise $75 billion in the biggest initial share sale ever.

SpaceX said in a regulatory filing that it would offer over 550 million shares at $135 each next week, which could value the company at a whopping $1.8 trillion.