Nasdaq plummets 2.6% on AI spending concerns

The Nasdaq fell 2.6% on October 23, 2026, its largest decline since June, as concerns over AI spending intensified. Meta announced it had signed commitments totaling $825 billion for its AI business and saw free cash flow swing to a deficit of $2.1 billion, with shares plunging 7%. Major tech companies including NVIDIA were impacted, with the Philadelphia Semiconductor Index declining 6.7%.

US tech stocks have dropped sharply amid market jitters over the sustainability of companies' enormous capital investments in AI. The Nasdaq Composite, which is dominated by tech firms linked to the AI boom, fell 2.6 percent on Thursday, its steepest fall since the index tumbled 4.2 percent on June 5.

Triggered by earnings reports from major tech companies like Meta, investor sentiment contracted sharply amid growing concerns over how astronomical AI investment costs will be financed and whether commensurate profits can be generated. Meta reported third-quarter earnings that beat market expectations but announced plans to issue a new class of non-voting shares to secure funds for expanding AI investments. Concerns spread among investors that the burden of AI investments might exceed companies' internal cash generation capabilities.

Technology stocks fell broadly as doubts persisted over whether the astronomical AI outlays would translate into actual profits. AMD lost 8.1%, Micron 6.3% and Nvidia 4.4%. The S&P 500 lost 1.21% to 7,663.43, its biggest daily decline since July.

Michael Antonelli, a market strategist at asset management firm Baird Private Wealth Management, said: "The concern surrounding AI is no longer about the technology itself. The problem is how everyone can finance it all at the same time." Investors reduced exposure to technology majors on doubts over AI spending and moved toward safer assets such as Treasuries and the yen.