Shares slipped on Thursday amid renewed caution surrounding the artificial intelligence technology sector. Australia's S&P/ASX 200 index closed down 0.4 percent at 8793.2 points, after touching a two-day low of 8764 earlier in the session.
The downturn in Australian markets reflected broader declines across Asia. Japan’s Nikkei index fell 2.7 percent, while South Korea’s KOSPI dropped 3.5 percent. Chinese technology giants, including Alibaba, JD.com and Tencent, also faced significant losses in Hong Kong trading.
Globally, companies linked to AI have experienced considerable volatility since reaching record valuations in June. Investor concern centers on the large-scale investments required and the extended timelines for these firms to achieve profitability, amid rising costs associated with servicing debt. This uncertainty persisted despite a strong quarterly report from SpaceX, Elon Musk’s aerospace company, which had its first earnings release since its June public listing. The report provided some optimism ahead of a key earnings season, supporting gains across major U.S. stock indexes on Wednesday night.
However, mixed results from after-hours earnings reports by Meta Platforms and Tesla complicated investor sentiment. Tesla reported lower profits for the July-September quarter and reduced its capital expenditure forecast for the year by roughly 20 percent. Conversely, Meta increased its projected spending on artificial intelligence development.
Chris Weston, head of research at Pepperstone, noted that while Meta’s results highlight ongoing AI investment, the focus is shifting toward how such funding is being managed. “Investors will reward growth and monetisation, yet they’re also becoming more sensitive to how the next leg of investment is financed and what it means for existing shareholders,” he said.
On the Australian stock exchange, technology stocks Codan and Xero led declines, falling 8.1 percent to $56.53 and 11 percent to $63.70, respectively. NextDC, which plunged 42 percent the previous day following a profit downgrade and a halt to four AI-related expansions, rebounded 7.5 percent to $5.75.
In the resource sector, BHP slipped 2.4 percent to $57.13, Rio Tinto declined 1.5 percent to $150.30, and Woodside Petroleum dropped 3.5 percent to $32.77 after lowering its production guidance. Market confidence was further dampened by a rise of more than 1 percent in oil prices, triggered by attacks by Yemen’s Houthi forces on a Saudi Aramco oil field and King Fahd International Airport in Dammam, Saudi Arabia.
Australia’s major banks closed higher, with ANZ leading gains at a 1.2 percent increase to $39.69. The Finance Sector Union criticized Westpac, which rose 0.4 percent to $35.68, for allegedly using the announcement of 2,500 job cuts at National Australia Bank as justification for its own 253 redundancies. NAB saw a modest 0.2 percent rise to $40.01, while Commonwealth Bank inched up 0.1 percent to $157.17.
Meanwhile, furniture retailer Nick Scali suffered a sharp decline of 15.3 percent to $12.03 after issuing a profit warning.