AI Unwind Takes 2% Off the Nasdaq: Stock Market Today

Markets are paying more and more attention to hyperscalers' plans to spend more and more money on artificial intelligence. When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.You are now subscribedYour newsletter sign-up was successfulWant to add more newsletters?Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. 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Early indications of a risk-on mood gave way to aggressive selling as the rotation out of software expanded to include hardware stocks on Thursday. Technology and AI-related names took their toll on all three main equity indexes, while risk-off sectors such as utilities and consumer staples surged."There's clearly a lot going on beneath the surface," Mizuho analyst Dan O'Regan says, "with no shortage of headlines and chatter driving tape action" amid steep losses for large-cap tech stocks, growth stocks and higher-risk assets generally.The analyst suggests emerging concerns about the impact of new artificial intelligence (AI) companies on existing sectors and industries are merging with ongoing worries about whether hyperscalers are blowing an AI bubble.Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special IssuesProfit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.Profit and prosper with the best of expert advice - straight to your e-mail."The largest spenders are weighing heavily on the NDX today," O'Regan writes of Microsoft (MSFT, -0.6%), Amazon.com (AMZN, -2.3%), Tesla (TSLA, -2.7%) and Meta Platforms (META, -2.8%) and their effect on the Nasdaq-100 Index.All four of the Magnificent 7 stocks "have massive index weightings," the analyst observes, "and ongoing concerns around free cash flow, capex intensity, and return on AI investment continue to attract scrutiny."Meanwhile, investors, traders and speculators ponder when the Federal Reserve will make its next move on interest rates, as weaker-than-expected housing starts data drove a mini-bounce in the probability of a rate cut at the next Fed meeting, from 6.4% on Wednesday to 9.8% on Thursday.After a stronger-than-expected January jobs report, markets will price incoming inflation data when the Bureau of Labor Statistics (BLS) releases the January Consumer Price Index (CPI) report tomorrow morning. The median estimate for CPI based on 12 collected by FactSet is 2.4%."If 2.4% is the actual year-over-year increase in the CPI," FactSet analyst John Butters notes, "it will mark the smallest increase since May 2025 (2.4%). It will also be below the trailing 12-month average of 2.7%." CPI for December was 2.7%; the median estimate was 2.7%.Cisco Systems (CSCO) enjoyed the benefits of the AI boom during its fiscal second quarter, as earnings of $1.04 per share topped a Wall Street estimate of $1.02, and revenue of $15.3 billion exceeded expectations for $15.1 billion.Management guided to third-quarter EPS of $1.02 to $1.04, in line with Wall Street's $1.03 forecast, on revenue of $15.4 billion to $15.6 billion, which is above a $15.2 billion Street forecast."We believe Cisco is uniquely positioned to deliver the trusted infrastructure needed to securely and confidently power the AI-era," CEO Chuck Robbins said in Cisco's earnings announcement.That wasn't enough for Mr. Market, at least today. CSCO was the worst performer among the 30 Dow Jones stocks, falling 12.3%. UBS analyst David Vogt remains bullish, though."Blink and you may miss an opportunity to buy Cisco shares as AI momentum builds," the analyst says in a post-earnings note. "Cisco reported another strong quarter," Vogt writes, "as key forward-looking metrics like 'AI' and 'Product' orders surpassed expectations."Vogt sees "increased visibility into not just strong growth in the second half of FY26 but also FY27 given the timing of revenue recognition for 'AI' orders." The analyst reiterated his Buy rating on CSCO stock and raised his 12-month target price from $90 to $95.Anheuser-Busch InBev (BUD) fulfilled its promise as perhaps the king of consumer staples stocks, rising 3.8% after the beer company reported earnings of 95 cents per share (+8.0% year over year) on revenue of $15.6 billion (+4.8% YoY), beating Wall Street's bottom-line forecast for 88 cents and meeting its top-line estimate.BUD, whose roster of iconic brands is led by Budweiser, is up more than 20% so far in 2026 amid a rotation out of mega-cap tech stocks and other names related to the AI trade."Beer plays an important role in bringing people together," CEO Michel Doukeris says in the statement announcing fourth-quarter results for AB InBev, "and creating moments of celebration."Looking for more timely stock market news to help gauge the health of your portfolio? Sign up for Closing Bell, our free newsletter that's delivered straight to your inbox at the close of each trading day.Indeed, BUD is a staple because people consume its products in good times and in bad times, making it a solid investment through economic cycles.By the closing bell on Thursday, the Nasdaq Composite was down 2.0%, at 22,597, the S&P 500 had shed 1.6% to 6,832, and the Dow Jones Industrial Average was lower by 1.3% at 49,451.Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.David Dittman is the former managing editor and chief investment strategist of Utility Forecaster, which was named one of "10 investment newsletters to read besides Buffett's" in 2015. A graduate of the University of California, San Diego, and the Villanova University School of Law, and a former stockbroker, David has been working in financial media for more than 20 years. The Lette A new chairman of the Federal Reserve has been named. What will this mean for the economy?

The Kiplinger Letter An emerging public health issue caused by artificial intelligence poses a new national security threat. Expect AI-induced psychosis to gain far more attention. The January CPI report will be released Friday morning. Here's what economists expect the inflation data to show. The Lette A new chairman of the Federal Reserve has been named. What will this mean for the economy? The January CPI report will be released Friday morning. Here's what economists expect the inflation data to show. This kind of planning focuses on the intentional design of your estate, philanthropy and long-term care protection. The prospect of more interest rate cuts has investors wondering how to enhance the bond portion of their portfolio. A fixed indexed annuity could be the answer. The terms fiduciary and fee-only are not interchangeable. Knowing the difference ensures investors get the advice and the consumer protection they need. Investors, traders and speculators are taking time to weigh the latest labor market data against their hopes for lower interest rates. The January jobs report came in much stronger than expected and the unemployment rate ticked lower to start 2026, easing worries about a slowing labor market. American Express stock is still a solid investment because management understands the value of its brand and is building a wide moat around it.