Nasdaq slides more than 2% as AI spending fears hit tech stocks

Technology stocks lead the decline

The Nasdaq Composite fell more than 2% on Thursday, October 22, as a broad retreat in technology and artificial-intelligence stocks outweighed steadier trading in much of the rest of the U.S. market. The Associated Press reported the index was down 2.4% at 12:56 p.m. Eastern, while the S&P 500 had lost 1.3% and the Dow Jones Industrial Average was off about 40 points. ^[2]

Reuters put the Nasdaq at 26,152.90 at 11:58 a.m. Eastern, down 551.50 points, or 2.06%. The outlet reported that declining shares outnumbered advancing ones by 1.23 to 1 on the Nasdaq and that the index had recorded 247 new 52-week lows against 70 new highs. Because trading had not ended, those figures remained subject to change before the closing bell. ^[1]

AI investment concerns return

The heaviest selling centered on companies tied to the AI buildout. AP reported that Nvidia fell 4.3%, Meta Platforms lost 7.4% and cloud-computing company CoreWeave dropped 9.6%. Lam Research sank 11.1% even after reporting quarterly profit and revenue slightly above analysts’ expectations, as its profit forecast disappointed investors. ^[2]

Investors were again questioning whether the returns from AI infrastructure will justify the cost of data centers, chips and borrowing. Reuters said Meta’s plan to create a new class of non-voting shares to help finance investment added to those concerns. Tesla also traded lower after reducing its projected 2026 capital spending from $25 billion to $20 billion, despite reporting better-than-expected adjusted earnings. ^{[1] [3]}

The selloff reversed part of Wednesday’s technology-led rally. Reuters estimated that the Philadelphia Semiconductor Index was on course to lose more than $616 billion in market value and said the Nasdaq-100 was positioned to erase nearly $1 trillion. Those estimates described intraday moves rather than finalized losses. ^[1]

Oil and bonds add to the market picture

A jump in energy prices added another source of pressure. AP reported Brent crude rose 2.9% to $111.99 a barrel after touching its highest price in five months. Higher oil prices can intensify inflation concerns and complicate the outlook for interest rates, while technology shares are particularly sensitive to changes in financing costs and long-term growth assumptions. ^[2]

Demand for safer assets pushed the 10-year Treasury yield down to 4.98% from 5.13% late Wednesday, according to AP. Most stocks in the S&P 500 were nevertheless higher, showing that the index-level losses were concentrated in its largest technology companies. Procter & Gamble, Lockheed Martin and CSX were among the companies whose gains helped limit the broader decline. ^[2]

The final scale of the decline will depend on late-session trading. Closing levels, the day’s finished market breadth and whether technology shares recover before 4 p.m. Eastern were not yet known when this report was prepared. ^{[1] [2]}