Wall Street mixed as AI stocks weigh on sentiment

US markets are trading without a clear direction on Thursday, as profit-taking in major artificial intelligence names drags down tech indices. Despite a slight easing of geopolitical tensions in the Middle East, the Nasdaq 100 is down 1%, while the S&P 500 remains fairly flat. Conversely, the Dow Jones is up 1.5%.

The primary source of market pressure stems from the semiconductor sector. Following Wednesday's closing bell, Broadcom released results that investors deemed mixed, largely due to guidance that failed to meet the exceptionally high expectations surrounding AI players.

This release triggered a wave of profit-taking across the entire sector. Broadcom is tumbling 15%, pulling down more volatile stocks such as Micron, Marvell Technology and Arm in its wake.

On the geopolitical front, Middle East tensions are showing some signs of cooling. Following two days of discussions in Washington, Israel and Lebanon have reached an pmagreement providing for the implementation of a ceasefire and the creation of "pilot zones" under the control of the Lebanese army, according to a joint statement reported by Franceinfo.

This diplomatic breakthrough is helping to support investor sentiment, although its impact remains limited for now in the face of the volatility observed in the tech sector.

Amongst today's earnings reports, CrowdStrike posted results that beat expectations. However, the stock is retreating 7.2% as investors worry about a significant increase in planned spending as the group ramps up its investments in artificial intelligence.

This reaction illustrates a trend observed over several weeks: while markets continue to support AI-related spending, they are becoming more demanding regarding profitability and the ability to generate rapid growth.

Alphabet is one of the few large-cap tech stocks trading up. The shares are gaining more than 2.5% following the announcement of a strategic partnership between IBM and Google Cloud.

This collaboration aims to launch a new offering dedicated to assisting companies in deploying large-scale artificial intelligence and modernizing their IT infrastructure. IBM shares are trading near break-even.

Finally, UnitedHealth is one of the Dow Jones' top performers, rising nearly 6% on the back of several favorable analyst recommendations and price target hikes within the healthcare sector.