S&P 500 Falls 1%, Nasdaq Drops 2% as AI-Spending Jitters Hit Wall Street

S&P 500 Falls 1%, Nasdaq Drops 2% as AI-Spending Jitters Hit Wall Street

US stocks tumbled on Thursday as investors once again questioned whether the tech industry's massive spending on artificial intelligence will pay off. The S&P 500 fell about 1% to roughly 7,681, while the tech-heavy Nasdaq composite dropped 2.2% to around 26,121, weighed down by losses across the chip and software sectors.

The selloff was fueled by earnings fallout: Lam Research plunged around 10% after a weak outlook, and Tesla slid further after revealing it will cut 2026 capital spending from more than $25 billion to about $20 billion — reviving doubts about the return on AI infrastructure bets. Intel, AMD and Nvidia also fell as the selling spread.

Not every stock suffered. Spotify jumped 8-9% on strong subscriber and margin numbers, Lockheed Martin rose 7% after raising its outlook, and P&G gained 6% on a sales and profit beat. Meanwhile Brent crude climbed 2.6% to about $111 a barrel — its highest since May — gold slipped around 2% to $4,054, and the 10-year Treasury yield hovered near 5.01% as investors sought safety.

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