AI chip stocks led a broad tech selloff on Thursday, pushing the Philadelphia SE Semiconductor Index down 6.3%, its biggest one-day percentage drop since June 23. The Nasdaq Composite fell 712.85 points, or 2.68%, to 25,988.10, its steepest daily decline since early June, as a run of AI-related earnings reports renewed concern about how much companies are spending on AI.
The damage was concentrated in tech. The S&P 500 fell 1.41% to 7,647.74, while the Dow Jones Industrial Average slipped just 0.20% to 52,749.70. Nearly two of every three S&P 500 stocks actually rose on the day, but losses in the largest technology names outweighed them.
Nvidia fell 4.3% in afternoon trading and, as the largest US stock by market value, was the single biggest drag on the S&P 500. Western Digital, Intel, Sandisk and Marvell each fell more than 7%.
“There's a hypersensitivity around earnings for AI-related stocks.”— Oliver Pursche, Senior vice president, Wealthspire Advisors
Key facts
- 01The Philadelphia SE Semiconductor Index fell 6.3% on October 22, its biggest one-day drop since June 23.
- 02The Nasdaq Composite fell 712.85 points, or 2.68%, to 25,988.10, its steepest daily decline since early June.
- 03Nvidia fell 4.3% in afternoon trading and was the largest drag on the S&P 500.
- 04Lam Research fell 11.6% and CoreWeave fell 11%; Western Digital, Intel, Sandisk and Marvell each lost more than 7%.
- 05Meta fell more than 7% after reporting its first cash outflow in more than a decade, driven by AI spending.
Lam Research dropped 11.6% even though its quarterly profit and revenue came in slightly above expectations. Its profit forecast midpoint landed slightly below analyst estimates, and with the stock up 52.4% this year, there was little room for a miss. CoreWeave fell 11%; the company borrowed money to buy Nvidia AI chips that it rents out over the cloud, and investors have been focused on that debt.
Meta AI parent Meta Platforms fell more than 7% despite beating revenue expectations. The company reported its first cash outflow in more than a decade, driven by AI spending, and said it plans to create a new class of non-voting shares, through a two-for-one split, to raise money for AI investments and other expenses. Tesla also fell, even after unexpectedly posting positive free cash flow and cutting its 2026 capital spending plans.
The concerns driving the selloff centered on cost and payback. Investors are weighing the price of borrowing to build data centers and buy AI chips, uncertainty about returns on that investment, and the possibility of government restrictions on AI. Some are also questioning whether AI stock prices ran too far after a multiyear rally, even as companies in the sector keep reporting growth.
Oliver Pursche, a senior vice president at Wealthspire Advisors, said tech leaders are still under pressure to keep spending. "If you're a tech CEO, you can't afford to risk being left behind," he said, while adding that investors "don't know what the (return on investment) is going to be."
The chip index remains well ahead for the year despite the drop. It sits more than 26% below its June 22 record close but is still up 52.2% in 2026, compared with an 11.8% year-to-date gain for the S&P 500.
The selloff extended beyond the US. South Korea's Kospi fell 3.5%, Hong Kong's Hang Seng fell 3% and Japan's Nikkei 225 fell 2.7%. Oil added pressure: Brent crude rose 3.7% to $112.80 a barrel, a five-month high, after Iran-backed Houthis struck Saudi targets.
Earnings season remains strong overall. Of the 111 S&P 500 companies that had reported, 83% beat analyst expectations, according to LSEG data.
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