Nasdaq Suffers Worst Day Since June as AI Spending Doubts Rattle Tech Stocks
The Nasdaq Composite dropped 2.6% on Thursday in its worst session since early June, as Meta's AI spending plans and weak chipmaker earnings revived doubts about the cost of the artificial intelligence boom.
The Nasdaq Composite fell 2.6% on Thursday, its worst single-session drop since early June, as a wave of big-company earnings reports revived fears that the race to fund artificial intelligence has grown too expensive.
The S&P 500 lost 1.2%, marking its worst day since July, while the Dow Jones Industrial Average eked out a gain of 0.02%, rising 11.89 points to 52,867.98, according to Reuters.
Meta Platforms sat at the center of the selloff. The Facebook parent reported results that beat analyst expectations, but its shares slid 7% after it posted its first cash outflow in more than a decade because of AI spending and announced a two-for-one split of non-voting shares to raise capital for the technology, Reuters reported. Investors have been zeroing in on Meta’s $825 billion AI spending plan and what it means for future returns.
Semiconductor stocks take the hardest hit
The Philadelphia SE Semiconductor Index plunged 6.7%, its biggest daily drop since June 23. The index is now more than 26% off its record close from June 22, though it is still up 51.5% this year. Chipmakers Intel, AMD, SanDisk and Marvell each fell more than 8%, Reuters reported.
Tesla shares dropped 3.1% even though the electric car maker unexpectedly posted positive free cash flow in the quarter and cut its 2026 capital spending plans.
“Investors are starting to realize that there are some holes in the AI story,” said Paul Nolte, a market strategist at Murphy & Sylvest in Elmhurst, Illinois. “And that’s having an impact on the indices because they’re so heavily weighted toward technology.”
The day’s winners
Not every report disappointed. Blackstone rose 8.4% after saying wider credit spreads on AI-related debt could let it lock in higher returns. Lockheed Martin climbed 7% after raising its annual sales and profit forecasts, Spotify jumped 11.1% on an upbeat fourth-quarter profit outlook, Procter & Gamble added 5.6% after beating estimates, and Union Pacific gained 3.6% on a quarterly earnings beat, Reuters reported.
Of the 111 S&P 500 companies that have reported third-quarter results so far, 83% have beaten analyst expectations, according to LSEG data cited by Reuters.
Trading was heavy: 18.79 billion shares changed hands on U.S. exchanges, above the 17.19 billion average for the last 20 full sessions.
Reporting based on coverage by Reuters (via SRN News).
