Nasdaq Leads Wall Street Lower

US stocks moved lower on Thursday as concerns over rising artificial intelligence spending weighed on technology shares. The Nasdaq Composite fell 319.78 points to 26,230.07, a decline of 1.20%, at 11:49 a.m. ET.

The S&P 500 dropped 24.46 points, or 0.32%, to 7,719.52, while the Dow Jones Industrial Average declined 182.81 points, or 0.35%, to 52,292.29.

Despite the pressure on major indexes, broader market participation was more resilient. Advancing stocks outnumbered decliners by 1.97 to 1 on the New York Stock Exchange and 1.5 to 1 on the Nasdaq. Healthcare and financial shares helped offset some of the technology sector’s weakness.

Alphabet’s Sell-Off Intensifies AI Spending Concerns

Alphabet shares fell 11.7% after the company reported disappointing search advertising results and a surge in cash burn as AI-related expenditure accelerated. The decline put the Google parent on track for its steepest one-day loss on record.

If the losses held, Alphabet would lose more than $464 billion in market value, accounting for most of the more than $500 billion in potential losses facing the Nasdaq-100.

The sell-off reflects growing investor scrutiny of whether the revenue generated by AI services can justify the substantial cost of expanding computing capacity. Concerns about debt-financed infrastructure investment have also increased as borrowing costs rise.

Microsoft shares declined 1.5% following reports that the company planned to raise at least $25 billion through a bond sale. The decline came despite its previous day’s strong free cash flow results and positive cloud growth outlook.

Software and Semiconductor Stocks Retreat

Software stocks weakened following quarterly results from Fortinet and ServiceNow, both of which fell more than 20%. The declines added to broader concerns about valuations and the outlook for technology companies.

The Philadelphia Semiconductor Index fell 0.9%, putting it on track to end a four-day winning streak. Marvell Technology dropped 11.6% after reports that it was in advanced talks to acquire data-center optics maker Lumentum Holdings. Lumentum shares rose 3.5%.

Amazon also fell 2.9% ahead of its quarterly earnings announcement after the market close. Meta and Apple traded higher, demonstrating that losses were not uniform across major technology companies.

Healthcare and Financials Provide Support

Strength in other sectors helped limit the broader market decline. Eight of the 11 S&P 500 sectors traded higher, with healthcare and financials leading gains.

Eli Lilly climbed more than 6% to a record high after forecasting annual revenue above Wall Street expectations, while Mastercard advanced 4.2% after exceeding third-quarter profit estimates.

Caterpillar moved in the opposite direction, falling 8% after maintaining its annual sales forecast. The reaction raised questions about the durability of demand for power-generation equipment tied to data-center expansion.

Inflation and Interest Rates Remain in Focus

September data showed that US inflation accelerated, while separate figures indicated that the economy grew at its fastest pace in a year during the third quarter.

Following the Federal Reserve’s decision to hold interest rates steady on Wednesday, money market traders maintained expectations of a potential rate increase in December. Higher borrowing costs could further complicate financing for companies committing substantial capital to AI infrastructure.

What Investors Should Watch Next

Investors will focus on upcoming earnings from major technology companies, including Amazon, as well as developments in inflation and interest-rate expectations. Results may provide further evidence of whether cloud and AI demand is translating into sustainable revenue and cash generation.

The divergence between technology and other sectors also remains important. Companies demonstrating stronger earnings and cash flow may be better positioned to withstand scrutiny, while businesses facing rising costs and uncertain returns could remain under pressure.