NEW YORK — U.S. technology stocks extended their slide on Wednesday as chipmaker Advanced Micro Devices tumbled 17 percent on a disappointing outlook, deepening a selloff fueled by concerns that artificial intelligence will disrupt established business models.
The Nasdaq Composite fell 1.5 percent to 22,904.58. The S&P 500 slipped 0.5 percent to 6,882.72. The Dow Jones Industrial Average bucked the trend, rising 0.5 percent to 49,501.30 as investors rotated into defensive and value stocks.
Trading volume reached 24.6 billion shares, well above the 19.9 billion average over the previous 20 sessions.
Chipmakers join software stocks in the rout
AMD dropped 17.3 percent — its steepest single-day decline since 2017 — after reporting quarterly results that failed to match elevated expectations. The chipmaker's first-quarter revenue forecast disappointed investors who had bid up the stock over the past year.
Analysts at Jefferies said expectations had "gotten a bit too high" ahead of the results. One-off data centre sales to China also accounted for a larger-than-anticipated share of revenue.
Nvidia fell 3.4 percent, and the PHLX semiconductor index dropped 4.4 percent. Qualcomm shares sank 9 percent in after-hours trading after forecasting revenue of $10.6 billion for the current quarter, below the $11.2 billion Wall Street expected.
CEO Cristiano Amon blamed an industry-wide memory chip shortage caused by suppliers prioritizing high-end hardware for data centres over traditional consumer electronics.
Software stocks keep sliding on AI disruption fears
Software companies added to recent losses as investors weighed whether advancing AI tools will undermine industry incumbents.
Palantir slumped nearly 12 percent, reversing gains from the previous session. Snowflake fell 4.6 percent, and Datadog lost 3.3 percent.
"If you've got legacy software that's old and clunky, you're a ripe target for AI," said Josh Chastant, portfolio manager at GuideStone Funds. "We're a bit bearish on software in general."
The JPMorgan index tracking U.S. software stocks has dropped 18 percent since the start of the year, approaching its lowest level since April.
Canadian data company caught in the crossfire
Toronto-based Thomson Reuters has fallen more than 20 percent over the past five days as the AI-driven selloff spread to data and analytics firms.
The London Stock Exchange Group closed slightly lower after sliding 12.8 percent on Tuesday. UK media company Relx finished down 1.3 percent, adding to a 14.4 percent drop in the previous session.
Marija Veitmane, head of equity research at State Street, called the market reaction "overly pessimistic."
"I don't think we can completely replace data analytics and software writing," she said. "Those companies will end up being more efficient. It's incremental improvement, rather than total revolution."
Alphabet spending plans rattle investors after hours
Google parent Alphabet fell nearly 2 percent ahead of its quarterly results.
After the close, shares swung sharply as the company reported capital expenditure plans of $175 billion to $185 billion for 2026 — far above the $120 billion Wall Street had modeled.
The aggressive spending signaled Alphabet's intent to deepen its AI investments despite market anxiety over tech valuations.
The labour market shows signs of softening
A report from ADP Research showed U.S. private employers added just 22,000 jobs in January, well below the 45,000 economists had forecast.
The official government jobs report, originally scheduled for Friday, has been delayed to next Wednesday due to a four-day partial federal shutdown that ended Tuesday.
Eli Lilly bucks the trend on weight-loss drug demand
Eli Lilly rose 10.3 percent after forecasting 2026 profit above Wall Street expectations, driven by surging demand for its Mounjaro and Zepbound diabetes and weight-loss treatments.
Super Micro Computer jumped 13.8 percent after raising its annual revenue forecast on sustained demand for AI-optimized servers.
Bitcoin extends losses, gold volatile
Bitcoin fell 3.1 percent to around $73,000, bringing its 2026 decline to 17 percent. The cryptocurrency has shed more than 40 percent from its October peak.
Gold traded near $5,000 an ounce after swinging between $4,500 and $5,600 over the past week. The precious metal has roughly doubled in price over 12 months as investors sought alternatives amid tariff uncertainty and concerns about the U.S. dollar.
Seven of the 11 S&P 500 sectors rose on Wednesday, led by energy and materials, as investors shifted capital away from high-growth technology names.
