AI Stocks Drop, Making for Worst Day in 3 Weeks

More drops for superstar artificial intelligence stocks knocked Wall Street off its record heights on Friday, with the S&P 500 falling from its all-time high for its worst day in three weeks.

• The Dow fell 245.96 points, or 0.5%, to 48,458.05, finishing the week up 1%.
• The S&P 500 fell 73.59 points, or 1.1%, to 6,827.41, closing the week down 0.6%.
• The Nasdaq fell 398.69 points, or 1.7%, to 23,195.17, ending the week down 1.6%.

Broadcom dragged the market lower and tumbled 11.4% even though the chip company reported a stronger profit for the latest quarter than analysts expected. Analysts called the performance solid, and CEO Hock Tan said strong 74% growth in AI semiconductor revenue helped lead the way. But investors may have been concerned with some of Broadcom's financial forecasts, including how much profit it can squeeze out of each dollar of revenue. The AI heavyweight may also have simply run out of momentum after its stock came into the day with a surge of 75.3% for the year so far, more than quadruple the S&P 500's gain.

The drop added to worries about the AI boom that flared a day before, when Oracle plunged nearly 11% despite likewise reporting a bigger profit for the latest quarter than analysts expected. Questions remain about whether all that Oracle spending on AI technology will produce the kind of profits that make it worthwhile, along with how the tech giant will pay for it. Such doubts are dogging the AI industry broadly, even as many billions of dollars flow in. Broadcom was the heaviest weight on the S&P 500 on Friday, followed by Nvidia. The chip company fell 3.3%. Oracle fell another 4.5%.

Stocks of companies that depend on spending by US consumers were relatively strong Friday, as two out of every five stocks in the S&P 500 rose. Oil prices eased this week, which could help ease people's bills, and hopes are rising that easier interest rates will support spending. Chipotle Mexican Grill rose 3.6%, McDonald's climbed 2.3%, and Norwegian Cruise Line added 1.5%. The biggest gain in the S&P 500 came from Lululemon Athletica, which jumped 9.6% after reporting better profit and revenue for the three months through Nov. 2 than analysts expected.