The Nasdaq Composite closed down 2.6% Thursday at 26,008.86 — its worst single session since June — as a fresh wave of anxiety over Big Tech's AI spending binge wiped out the week's earlier gains. The S&P 500 fell 1.2% to 7,663.43, while the Dow Jones Industrial Average, propped up by non-tech names, barely moved, edging up 0.02% to 52,867.98.

The selloff built on two days of shaky earnings reactions. Meta Platforms shares extended their slide after the company's blowout revenue was overshadowed by a 37% drop in operating income tied to AI infrastructure spending, and chipmakers broadly weighed on the index as investors questioned whether the industry's capital-spending spree can keep paying off. CNBC reported that megacap tech was the single biggest drag on the day's trading.

Treasury yields fell as investors rotated into bonds, a classic risk-off signal, even as oil prices climbed on the back of escalating tensions in the Strait of Hormuz, where Iran claims it struck seven tankers overnight. The combination — falling tech stocks, rising oil, falling yields — points to a market bracing for both a slower AI payoff and a messier geopolitical backdrop heading into the final stretch of earnings season.

What Wall Street Is Watching

Yahoo Finance noted that Thursday's drop came even after Tesla posted a profit that beat estimates earlier this week, underscoring that strong individual results aren't enough to calm nerves about the sector's overall spending trajectory. The Motley Fool's midday coverage flagged chipmakers specifically as the sharpest decliners of the session, with several of the week's biggest losers concentrated among chip and cloud-infrastructure names most exposed to the assumption that AI capital expenditure will keep climbing indefinitely.

"TECH WEAKNESS DRAGS THE NASDAQ LOWER AS AI SPENDING CONCERNS MOUNT."

Thursday's slide echoes a pattern that's played out repeatedly this year. Back in July, Alphabet's decision to raise its 2026 capital-spending guidance to as much as $205 billion wiped out roughly 7% of the company's market value in a single session and dragged the Nasdaq down more than 2% that same day, as investors balked at the scale of AI infrastructure bills even amid strong cloud revenue growth. The same tension — explosive top-line growth versus ballooning, open-ended capital commitments — is now playing out across Meta, Tesla and the rest of Big Tech's earnings slate.

With more megacap earnings still to come this quarter, traders say Thursday's selloff is unlikely to be the last. Analysts are now watching whether upcoming reports repeat the Meta pattern — strong top-line growth undercut by spiraling AI costs — or whether at least one major tech name can convince the market its spending is actually paying off. Until then, strategists expect the index to stay volatile, swinging on every earnings call and every headline out of the Gulf.