Nasdaq falls 2.6% in its worst session since June 5
Chips plunged 6.7% and Meta fell 7% after reporting negative free cash flow from its artificial intelligence spending.
Tech stocks led Wall Street's drop on Thursday. The Nasdaq Composite, which is heavy on technology companies, lost 2.6% and closed at 26,008.86 points. It had not fallen that much in a day since June 5.
Meta was the trigger. The parent of Facebook and Instagram beat expectations in the third quarter, with revenue of $64,601 million, up 26% from a year earlier. But it spent $34,910 million on infrastructure, and its free cash flow came in at negative $2,120 million. Its stock fell about 7%.
Meta also announced a new class of nonvoting shares, which it will hand out as a dividend of one for each current share starting in January 2027. The company expects its share price, after the payout, to reflect a two-for-one split.
The blow reached chipmakers. The Philadelphia Semiconductor index lost 6.7%, though it is still up 51.5% for the year and more than 26% below its June 22 peak. Intel, AMD, Sandisk and Marvell fell more than 8%.
| Index | Points | Change |
|---|---|---|
| Nasdaq Composite | 26,008.86 | -2.60% |
| S&P 500 | 7,663.43 | -1.21% |
| Dow Jones | 52,867.98 | +0.02% |
Crude oil also hit its highest level in five months that day, after Houthi attacks on Saudi targets, adding to the pressure. Paul Nolte, a strategist at Murphy & Sylvest, said the mood reflects investors realizing there are gaps in the AI story.
The underlying doubt is what return the record investment in data centers and chips will bring, and how it is financed. Meta expects capital spending of between $135 billion and $145 billion in 2026. Its new share class takes effect Jan. 19, 2027.
