Nasdaq Slides Toward Its Worst Day Since June as Chip Stocks Plunge on AI Spending Doubts
The Nasdaq fell 2.3 percent Thursday, heading for its worst day since early June, as chip stocks plunged after Meta and Tesla earnings raised doubts about the pace of AI spending.
The Nasdaq Composite fell 2.3 percent in intraday trading Thursday, putting the tech-heavy index on track for its worst single-day loss since early June as a selloff in chip stocks deepened.
The S&P 500 fell 1.4 percent. The PHLX Semiconductor Index sank 5.7 percent, with every one of its components trading lower, according to Barron’s live market coverage.
Optical chipmakers took the hardest hit. The Roundhill Photonics & Optics ETF dropped 9.8 percent, on pace for its lowest close since the fund launched in August. Coherent was the worst performer in the S&P 500, falling more than 11 percent. The Roundhill Memory ETF fell 5.4 percent.
Earnings raised doubts about AI spending
The drop followed quarterly results from Meta and Tesla that were generally strong, and still rattled investors. The message the market heard, Rosenberg Research’s Dave Rosenberg wrote, was “spending discipline replacing capex euphoria.”
Tesla cut its 2026 capital spending outlook to $20 billion from $25 billion, a cautious signal after sales came in roughly flat from a year earlier. Tesla shares fell about 3.5 percent after the report, even though earnings of 48 cents a share beat the 45 cents analysts had expected, according to Investor’s Business Daily. Meta lifted the bottom end of its full-year capital spending guidance to $135 billion from $130 billion, while reporting that AI costs were growing faster than its sales. Chip supplier Lam Research offered guidance that merely matched estimates, breaking the pattern of big beats.
Selloff carried over from overnight futures
The losses extended a slide that began before the opening bell: Nasdaq 100 futures had fallen 1.6 percent overnight, while S&P 500 futures dropped 1 percent and Dow futures slid 0.6 percent. Barron’s noted that if the largest tech companies slow their spending on AI infrastructure, the effects could spread across the chain of suppliers that has powered much of this year’s rally.
Chip stocks have become closely tied to the AI trade, Barron’s wrote, so when doubts about AI spending flare up, semiconductor shares are usually the first to feel them.
Reporting based on coverage by Barron’s and Investor’s Business Daily.
