U.S. stocks closed mostly lower on Thursday, with the Nasdaq Composite dropping 2.6% to 26,008.86 as investors grew uneasy about the scale of artificial intelligence spending, according to CNBC. The S&P 500 lost 1.21% to finish at 7,663.43, while the Dow Jones Industrial Average edged up 11.89 points, or 0.02%, to 52,867.98. For the Nasdaq, it was the weakest session since June; the S&P 500 had its worst day since July.
Why it matters
The selloff shows how tightly the market's mood is now tied to the economics of AI. Investors are no longer rewarding spending on data centers and computing power without asking when it will pay off. Thursday's declines hit chipmakers, energy suppliers tied to data centers, and nuclear power names alike, suggesting doubts about the buildout are spreading across the sectors that have benefited from it.
Meta's spending plan sets off the retreat
Meta Platforms fell almost 7% despite beating revenue expectations and issuing upbeat guidance. According to CNBC, the company raised its capital expenditure forecast, underscoring how much it expects to invest in AI infrastructure. Wells Fargo traders said in a note that Meta's comments about the large amount of AI funding required caused the shares to reverse course and dragged on the wider market.
Chip stocks followed. Advanced Micro Devices dropped more than 8%, Micron Technology fell 6%, and Nvidia lost 4%. CoreWeave, a cloud computing provider focused on AI workloads, declined 10%. Its bond yields and credit default swaps have remained elevated, a sign of strain on its credit profile.
Nvidia CEO Jensen Huang told CNBC on Thursday that demand for such "neocloud" providers is "off the charts," but he also said capital is scarce and holding back growth. Wells Fargo traders said that remark about scarce capital is unsettling investors and reviving worries that credit markets are already stretched in terms of risk appetite.
JPMorgan traders wrote that Wednesday's bullish tone "reversed overnight" as Meta shares turned lower before the opening bell and as talk increased about renewed Iran-related risk following next month's U.S. midterm elections. They added that trading desk feedback pointed to a still-fragile narrative around AI financing and a lack of conviction among investors re-entering tech after the recent pullback.
Power and energy names caught in the downdraft
Companies that supply power and equipment for the AI boom suffered some of the steepest losses. GE Vernova and Bloom Energy each fell more than 11%. Vistra shed over 10%, Quanta Services dropped more than 8%, and Talen Energy and Eaton declined 8.3% and nearly 7% respectively. Nuclear names also slipped, with Oklo down more than 4% and NuScale Power off over 3%.
The common thread was the cost of expanding data centers. Meta's higher spending forecast, reported by CNBC, drew fresh attention to the gap between what AI infrastructure costs today and what it may earn later.
Oil climbs on Middle East reports
Crude prices rose sharply after The New York Times reported, citing sources, that the U.S. and Israel plan renewed strikes on Iran after next month's U.S. midterm elections. President Donald Trump told reporters late Wednesday that Washington is not negotiating with Tehran and that something will happen "fairly soon."
Brent crude futures gained 4% to settle at $113.17 per barrel, the highest close since May 4. West Texas Intermediate advanced 2.39% to $99.47.
Money moved toward government debt. The 10-year Treasury yield fell more than 17 basis points to 4.974%, its lowest in almost a month, while the 2-year yield dropped 16 basis points to 4.663%.
Other movers
Moderna shares fell as much as 25% after partial data on its cancer vaccine, developed with Merck, leaked ahead of release. The full data, published later Thursday, looked positive relative to Wall Street expectations: the personalized vaccine, called intismeran autogene, combined with Merck's Keytruda cut the risk of recurrence or death by 42% in certain melanoma patients compared with Keytruda alone.
Skydance shares slipped about 1% in afternoon trading after Tesla CEO Elon Musk made an investment of roughly $1 billion in the company, which is working to raise equity as part of a cost-cutting effort.
Netflix drew a downgrade from Wolfe Research. Analyst Peter Supino cited flat viewer engagement, heavy streaming competition, and doubts about long-term growth, noting that content spending rose by $3 billion over two years without a matching lift in engagement. He also removed his $95 price target.
What to watch: whether AI-linked shares stabilize as more companies report capital spending plans, and whether oil holds above $100 as the Iran situation develops.
