The Nasdaq 100 index dropped 2.9% on Thursday, marking its worst single-day performance in four months as investors grew concerned about rising capital expenditures among major technology firms. This decline occurred alongside a 1.2% drop in the S&P 500, while the Dow Jones Industrial Average ended the session flat and the Russell 2000 gained 0.1%.
The sell-off in technology stocks was driven by anxiety over the costs of building artificial intelligence infrastructure. The Invesco QQQ Trust, which tracks the Nasdaq 100, fell 3% on the day. Semiconductor stocks were particularly vulnerable, with the VanEck Semiconductor ETF and the iShares Semiconductor ETF both declining between 6% and 7%. This weakness reflected broader losses in companies such as Micron Technology, Nvidia, and Broadcom. The Vanguard Information Technology ETF also lost 3% of its value.
Meta Platforms shares eased by approximately 6% after the company reported negative free cash flow for the quarter. In its quarterly earnings filing released after-hours on Wednesday, Meta disclosed that free cash flow fell to negative $2.12 billion. The company also raised the lower bound of its full-year capital expenditure forecast from $130 billion to a range of $135 billion to $145 billion. These figures underscore a capital-intensive strategy aimed at scaling AI infrastructure, a move that has intensified scrutiny from Wall Street analysts regarding ballooning technology costs.
Jon Gray, president of Blackstone, commented on the broader AI investment trend during an interview with Bloomberg Television following the firm's third-quarter results. He noted that the current environment involves building capacity while hoping to keep pace with demand, a dynamic often associated with market bubbles.
Geopolitical tensions also weighed on market sentiment by pushing oil prices higher. Reports indicated that American and Israeli forces are preparing potential military action against Iranian sites following upcoming domestic midterms. President Donald Trump stated on Wednesday evening that dialogue with Tehran was not currently under consideration. Consequently, Brent crude futures rose 4% to close at $113.17 per barrel, while West Texas Intermediate futures climbed 2.39% to reach $99.47 per barrel.
Individual stock movements varied across other sectors. SpaceX shares rose 1.4% in after-hours trading after reports emerged that the company is pursuing agreements for at least 80,000 cell sites across the United States to build a fourth nationwide wireless carrier. In contrast, Bloom Energy shares fell more than 3% in after-hours trading due to a negative cash flow print for the quarter ending in September, despite the fuel-cell manufacturer reporting better-than-expected third-quarter earnings and raising its full-year guidance.
Moderna shares slumped by approximately 18% after trial data for its melanoma vaccine leaked prior to its official announcement over the weekend. The data fell short of the high expectations held by Wall Street. Additionally, Datadog is reportedly attempting to acquire cloud security startup Upwind to expand its security footprint, according to an exclusive report by The Information. Elon Musk has also reportedly invested about $1 billion in Skydance Media, providing the entertainment company with capital to support its share price and cut costs following a merger that increased its debt.