US stocks drift as investors try to separate AI winners from losers

On the winning side of the market was Equinix, which jumped 11.6% even though the digital infrastructure company’s results for the latest quarter came up short of analysts’ expectations. It gave financial forecasts for 2026 that topped analysts’ expectations, and CEO Adaire Fox-Martin said that “demand for our solutions has never been higher.”

The company’s data centers are helping to power the world’s move into AI.

So are Nvidia's chips, and its stock ticked up by 0.9%. Because the AI frenzy has turned Nvidia into Wall Street's most valuable stock, the chip company was the strongest single force lifting the S&P 500.

At the same time, some companies are feeling the downside of the rush into AI.

AppLovin fell 15.5% even though it reported a stronger profit for the latest quarter than analysts expected. Like other software companies, it’s come under pressure recently from worries that AI-powered competitors will steal customers, and its stock came into the day with a loss of 32.2% for the young year so far.

AppLovin CEO Adam Foroughi pushed back on such worries, saying in a conference call with analysts that indicators show his company is doing well. “There’s a real disconnect between market sentiment and the reality of our business,” he said.

Cisco Systems sank 9.8% despite likewise topping analysts’ expectations for profit and revenue last quarter. The tech giant indicated that it may make less profit off each $1 of revenue during the current quarter than it did in the past quarter.

Analysts said that could be an indicator of higher prices for computer memory that everyone is having to pay amid a rush driven by AI.

More broadly, questions are rising about whether the businesses spending heavily on AI and paying companies like Equinix and Nvidia will end up seeing high-enough profits and productivity to make the investments worth it.

Outside of tech, McDonald's swung between gains and losses and then rose 0.3% after reporting a stronger profit for the latest quarter than analysts expected. The restaurant chain credited moves to improve its value and affordability, including cutting prices on some U.S. combo meals in September.

In the bond market, Treasury yields ticked lower after a report said slightly more U.S. workers filed for unemployment benefits last week than economists expected.

Still, the number was lower than the prior week’s, which is a signal that the pace of layoffs may be improving. It also followed a surprisingly strong report on the job market from Wednesday, which said the nation’s unemployment rate improved last month.

A strengthening job market could push the Federal Reserve to keep its cuts to interest rates on pause, even if President Donald Trump has been loudly and aggressively calling for lower rates. That’s because lower rates can worsen inflation at the same time that it gives the economy a boost.

It all raises the stakes for Friday’s upcoming report on inflation at the U.S. consumer level. Economists expect it to show inflation eased to 2.5% last month from 2.7% in December.

A separate report on Thursday said that sales of previously occupied homes slumped last month by more than economists expected, which also weighed on yields.

The yield on the 10-year Treasury slipped to 4.14% from 4.18% late Wednesday.

In stock markets abroad, South Korea’s Kospi rushed 3.1% higher thanks to gains for Samsung Electronics, SK Hynix and other tech stocks. The moves were more modest in other Asian markets.

In Europe, Germany’s DAX returned 1.2%, and France’s CAC 40 rose 1% for two of the world's bigger moves.

AP Business Writers Chan Ho-him and Matt Ott contributed.