US stocks moved lower on Wednesday as investors stepped away from record highs, balancing optimism around artificial intelligence against mounting geopolitical risks in the Middle East and a sharp rise in oil prices.
The Dow Jones Industrial Average dropped more than 600 points, shedding over 1%, while the S&P 500 lost around 0.7%. The Nasdaq Composite fell 0.9%, reversing some of the momentum that had driven markets to fresh records just a day earlier.
Attention remained fixed on the increasingly uncertain situation involving the United States and Iran. President Donald Trump recently insisted negotiations were continuing “at a rapid pace”, yet the path towards a lasting agreement appears far from straightforward as tensions across the region continue to intensify.
Fresh concerns emerged after reports of Iranian strikes against Kuwait and Bahrain, alongside US military action targeting Iran’s Qeshm Island. At the same time, Israel’s campaign against Hezbollah in Lebanon has added another layer of uncertainty, raising questions over regional stability and the future security of the Strait of Hormuz.
The renewed tensions pushed energy markets higher, with US West Texas Intermediate crude climbing above $96 a barrel and Brent crude approaching $98, adding to concerns that higher fuel costs could complicate the inflation outlook.
After the closing bell, attention shifted to Broadcom, one of Wall Street’s biggest artificial intelligence powerhouses.
Despite delivering record revenue and profits, the semiconductor giant saw its shares fall around 3% in after-hours trading as investors appeared unwilling to reward anything short of exceptional results.
Broadcom reported fiscal second-quarter revenue of $22.19 billion, up 48% from a year earlier, while adjusted earnings per share reached $2.44. Net income surged 88% to $9.31 billion as demand for AI infrastructure and custom chips continued to accelerate.
The figures reinforced Broadcom’s position at the centre of the AI spending boom. Revenue from AI semiconductors jumped 143% year-on-year to $10.8 billion, fuelled by demand for custom accelerators and networking equipment used in large-scale data centres.
Chief executive Hock Tan said AI momentum remains strong and forecast AI semiconductor revenue of roughly $16 billion in the current quarter, representing growth of more than 200% compared with a year earlier. Broadcom also guided for total third-quarter revenue of approximately $29.4 billion, comfortably ahead of analyst expectations.
Yet after a remarkable run that added roughly $300 billion to Broadcom’s market value in just five trading sessions, expectations had risen almost as quickly as the share price. The stock had already climbed nearly 40% this year and has increased almost ninefold since the generative AI boom began gathering pace in late 2022.
