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Nvidia Downgrade Sparks AI Growth Concerns

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  Published in Stocks and Investing on Tuesday, February 17th 2026 at 20:16 GMT by Channel NewsAsia Singapore
      Locales: UNITED STATES, IRAN (ISLAMIC REPUBLIC OF)

Tech Sector Under Pressure: Nvidia Downgrade Fuels AI Concerns

The Nasdaq Composite bore the brunt of the selling pressure, plummeting 2.20% to close at 15,473.87. This decline was largely attributed to a significant drop in Nvidia shares, which fell over 7% following a downgrade from Goldman Sachs. Nvidia, a dominant force in the semiconductor industry and a primary beneficiary of the AI surge, has seen its stock price soar in recent months. However, analysts are beginning to question the extent to which this growth can be sustained. The downgrade signals a growing concern that the extraordinary gains seen in AI-related stocks may be approaching a peak, prompting investors to take profits and reassess valuations. Kinley Linder, head of equity trading at BOK Financial, noted the increased investor caution, acknowledging the compelling nature of the AI story but also highlighting the inherent risk of a correction after such a dramatic run-up.

This isn't simply a Nvidia-specific issue. The broader AI narrative is being scrutinized. While the long-term potential of AI remains substantial, the near-term outlook is increasingly uncertain. Factors contributing to this uncertainty include the high cost of AI infrastructure, increasing competition, and the potential for regulatory intervention. A cooling of investment in the sector, or a slowdown in adoption, could significantly impact the performance of AI-dependent companies.

Geopolitical Relief Drives Down Gold Prices

In contrast to the struggles in the tech sector, gold prices experienced a notable decline, falling 0.8% to US$2,137.78. This downturn was directly linked to progress in US-Iran talks. The easing of geopolitical tensions in the Middle East reduced the demand for gold as a safe-haven asset. Gold traditionally thrives in times of uncertainty, offering a hedge against political and economic instability. As the perceived risk of conflict diminishes, investors tend to shift funds towards riskier assets, such as equities. Phillip Streible, market strategist at Blue Line Futures, confirmed this dynamic, pointing to a lower risk premium being priced into the market due to the improved diplomatic outlook and acknowledging significant profit-taking after a recent gold rally.

Broader Market Performance and Regional Trends

The Dow Jones Industrial Average and S&P 500 also finished lower, falling 0.24% and 0.58% respectively, demonstrating the widespread impact of the day's events. European markets mirrored the cautious sentiment, with the FTSE 100 and Stoxx Europe 600 both experiencing declines. However, Asian markets bucked the trend, with the Nikkei 225, Topix, and Hang Seng all posting gains. This regional divergence suggests that differing economic conditions and investor expectations are playing a role in shaping market performance. The resilience of Asian markets could indicate stronger economic fundamentals or a different assessment of the risks associated with AI and geopolitical events.

Commodities: Oil Prices Tick Up

Brent crude oil saw a modest increase, rising US$1.09, or 1.20%, to close at US$90.72. This price action was likely influenced by the same geopolitical factors affecting gold - the easing of tensions in the Middle East, a key oil-producing region. While reduced risk of disruption to oil supplies provided some support, the overall impact was relatively limited.

Looking Ahead: A Period of Increased Volatility?

The market's reaction to these developments underscores the current environment of heightened sensitivity and volatility. Investors are closely monitoring a complex interplay of factors, including technological innovation, geopolitical events, and macroeconomic data. The coming weeks are likely to see continued fluctuations as the market attempts to price in these uncertainties. The AI sector, in particular, will be under intense scrutiny, with investors seeking evidence of sustainable growth and profitability. The US-Iran talks will also remain a key focus, as further progress or setbacks could significantly impact investor sentiment and market direction.