NEW YORK (AP) — Broadcom is leading artificial-intelligence stocks lower on Friday, but other areas of the market that used to get left behind by Big Tech are picking up some of the slack. That’s keeping Wall Street indexes near their record heights.
The S&P 500 slipped 0.2% in morning trading, coming off its latest all-time high, while the weakness for tech had the Nasdaq composite down 0.4%, as of 10 a.m. Eastern time. The majority of stocks on Wall
Street were nevertheless rising, and the Dow Jones Industrial Average added 110 points, or 0.2%, to its own record.
Broadcom fell 8.8% 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 $1 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.
Broadcom’s stumble came a day after Oracle plunged nearly 11% despite likewise reporting a bigger profit for the latest quarter than analysts expected.
Doubts remain about whether all the spending that Oracle is doing on AI technology will end up being worth it. Such questions are weighing on the AI industry broadly, even as many billions of dollars continue to flow in.
It’s a return toward Earth for AI superstars, which earlier had been the main engine sending Wall Street higher. Other stocks that used to struggle with uncertainty about the U.S. economy’s strength and what the Federal Reserve will do with interest rates, meanwhile, are climbing.
The smallest U.S. stocks in the Russell 2000 index have leaped 2.6% so far this week, for example. That's much better than the 0.4% dip for the Nasdaq composite, which is packed with tech stocks.
The blue chip stocks in the Dow Jones Industrial Average, which has much less of an emphasis on tech, have also been beating the rest of the market. Visa was again one of the strongest forces lifting the Dow on Friday after rising 1%.
Now, investors are feeling more optimistic about interest rates. The Fed earlier this week cut its main interest rate for the third time this year and indicated another cut may be ahead in 2026. Wall Street loves lower rates because they can boost the economy and send prices for investments higher, even if they potentially make inflation worse.
The Fed’s chair, Jerome Powell, did hint on Wednesday that interest rates may be on hold for a while. But he helped soothe nerves when his comments appeared less harsh than some investors expected in shutting off the possibility of more cuts in 2026.
Stocks of travel-related companies were strong on Friday. Oil prices have eased this week, which should help trim their bills, and hopes are rising that easier interest rates will support the economy and encourage more people to take trips.
Norwegian Cruise Line steamed 3.4% higher for one of the market's bigger gains, while Southwest Airlines climbed 2.2%.
Lululemon Athletica jumped 12.6% for the biggest gain in the S&P 500 after reporting better profit and revenue for the three months through Nov. 2 than analysts expected. It also said its CEO, Calvin McDonald, plans to step down at the end of January following pressure to boost revenue.
In stock markets abroad, indexes rose across most of Europe and Asia.
Stocks jumped 1.7% in Hong Kong and rose 1.4% in Tokyo for two of the world’s bigger gains.
In the bond market, Treasury yields rose. The yield on the 10-year Treasury climbed to 4.18% from 4.14% late Thursday.
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AP Writers Teresa Cerojano and Matt Ott contributed.
