US stocks drop sharply as investors hunt for losers that will be hurt by
AI
[February 13, 2026] By
STAN CHOE
NEW YORK (AP) — U.S. stocks fell sharply Thursday as the market punished
companies seen as potential losers from artificial-intelligence
technology.
The S&P 500 sank 1.6% for its second-worst day since Thanksgiving,
though it’s still near its all-time high set late last month. The Dow
Jones Industrial Average dropped 669 points, or 1.3%, and the Nasdaq
composite fell 2%.
AppLovin lost nearly a fifth of its value and tumbled 19.7%, even though
it reported a stronger profit for the latest quarter than analysts
expected. Like other software companies, it’s come under pressure from
worries that AI may undercut its business while fundamentally changing
how people use the internet.
AppLovin CEO Adam Foroughi pushed back on the concerns, 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.
Its stock nevertheless widened its loss for the young year so far, which
came into the day at 32.2%.
Cisco Systems dropped 12.3% 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 the rush driven by AI.
More broadly, questions are rising about whether businesses that are
spending heavily on AI will end up seeing high-enough profits and
productivity to make the investments worth it.
The AI worries have hit software stocks particularly hard, but they’re
spreading to other industries and other markets. For bonds, for example,
“AI disruption risk” looks set to knock down prices, even if the threat
still looks hazy, according to strategists at UBS.
“The timing of AI disruption remains indeterminate, and the fog of
uncertainty is unlikely to dissipate quickly,” the strategists led by
Matthew Mish wrote in a report.
They expect the AI risk to lead to an increase in defaults in the
junk-bond and other low-rated markets. That could hurt even strong,
financially stable companies by making it more expensive for them to
borrow, including the Big Tech businesses that have been borrowing
heavily to pay for their AI investments. That spending has been a major
reason the AI frenzy has gotten as big as it has.
In a less likely but very damaging scenario, such knock-on effects
“could be significant, potentially undercutting capital spending,
investment plans, and ultimately the AI boom itself,” according to the
UBS strategists.
In the meantime, some of the companies serving customers with huge AI
budgets are benefiting.
Equinix, for example, jumped 10.4% even though the digital
infrastructure company’s results for the latest quarter fell 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.”
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James Conti works on the floor at the New York Stock Exchange in New
York, Thursday, Feb. 12, 2026. (AP Photo/Seth Wenig)
 The company’s data centers are
helping to power the world’s move into AI.
Outside of tech, McDonald’s rose 2.7% 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.
Walmart’s rally of 3.8%, meanwhile, was the strongest single force
pushing upward on the S&P 500. It erased losses from earlier in the
week after a report said spending at U.S. retailers overall stalled
in December.
All told, the S&P 500 fell 108.71 points to 6,832.76. The Dow Jones
Industrial Average dropped 669.42 to 49,451.98, and the Nasdaq
composite sank 469.32 to 22,597.15.
In the bond market, Treasury yields fell as investors looked for
safer places to park their cash. A report also 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 hold
interest rates steady and keep its cuts on pause, even if President
Donald Trump keeps loudly and aggressively calling for lower rates.
While lower rates can give the economy a boost, they can also worsen
inflation.
It all raises the stakes for Friday’s upcoming report on inflation
at the U.S. consumer level. Economists expect it to show inflation
slowed 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 fell to 4.10% 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 and in Europe.
Hong Kong’s Hang Seng fell 0.9%, and France’s CAC 40 rose 0.3%.
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AP Business Writers Chan Ho-him and Matt Ott contributed.
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