Deutsche Bank strategists note that United States (US) equities turned lower as AI-related worries resurfaced after a report that OpenAI missed internal 2025 targets. The S&P 500, NASDAQ and Mag 7 all pulled back, with semiconductors hit hardest, though Nasdaq futures later recovered part of the loss as investors look ahead to earnings from four Magnificent 7 names.

AI jitters hit US equities

"While higher oil prices and stagflation fears added to the risk-off sentiment, it was AI worries that were the bigger factor in driving yesterday’s equity losses."

"The major catalyst was a WSJ report that OpenAI had missed its internal revenue and user targets for the end of 2025. While OpenAI pushed back on the concerns, saying its consumer and enterprise businesses are “firing on all cylinders”, the news revived previous fears about whether the huge spending commitments will eventually pay off. "

"So after reaching record highs on Monday, the S&P 500 (-0.49%), the NASDAQ (-0.90%) and the Mag 7 (-0.29%) all fell back, whilst the Philly semiconductor index (-3.58%) saw its biggest loss in four weeks."

"Moreover, given the integration of OpenAI’s in the AI-ecosystem, those concerns spread from software and cloud companies like Oracle (-4.05%) and Coreweave (-5.83%), to semiconductor equipment firms like Qnity Electronics (-4.35%) and Applied Materials (-5.87%). So that’s rather dampened the mood into this week’s earnings, particularly with four of the Magnificent 7 set to report their earnings tonight after the close"

"As mentioned at the top Nasdaq futures (+0.49%) have recovered more than half yesterday's losses this morning with S&P 500 (+0.19%) futures also edging higher."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)