Nasdaq falls 2.6% in biggest daily loss since June amid AI spending concerns
Key Facts
The Nasdaq Composite fell 2.6% on Thursday, October 22, recording its biggest daily loss since June, according to the Associated Press. The index closed at 26,008.86 points, compared with 26,702.86 points in the previous session, according to EL7 data. The decline came as concerns resurfaced about the scale of AI spending and the returns companies can generate from it. Reuters said a series of prominent earnings reports reignited concerns about the technology spending race. Closing data show Thursday’s loss was 2.6%, while the available figures do not support a claim that the index had fallen 6% from its record high.
Meta was at the center of the pressure after its third-quarter results; its shares fell about 7% on October 22 despite revenue exceeding expectations, as earnings came in below forecasts, according to the Associated Press. Reuters said the company posted its first negative free cash flow in more than a decade, attributing it to AI-related spending. The free cash flow deficit was $2.12 billion in the third quarter of 2026, compared with positive cash flow of $10.63 billion in the same period of 2025. Meta also raised the lower end of its annual spending forecast to $135 billion from $130 billion, while keeping the upper end at $145 billion. The company also announced a plan to issue non-voting shares to raise capital, as the market weighs questions about financing its technology expansion.
The decline spread to other companies linked to technology and AI, with SpaceX shares down 9% and Nvidia down 4% on October 22, according to Reuters via Investing.com. Lam Research shares fell 10% after the company’s results, adding pressure on the semiconductor sector. At the sector level, the Philadelphia Semiconductor Index has lost about a quarter of its value since its record close on June 22, while remaining much higher since the start of the year, according to Reuters. Chip losses came as concerns focused on the cost of building AI infrastructure and how quickly these investments will translate into returns. Market strategist Matthew Maley said the issue “has become clearer to people, which is that it’s going to take a lot longer.”
Thursday’s session followed a week that also saw pressure on technology stocks; on October 16, the Nasdaq fell 2.1%, recording its first weekly loss in five weeks and its worst week since June, according to the Associated Press. On September 22, the index had surpassed its previous intraday high of 27,190.21 points, reaching 27,212.68 points for the first time since early June, according to a Reuters report via Investing.com. These levels show Thursday’s loss came after the index set an intraday record in September, but do not by themselves establish a 6% decline from the peak. The next day, Friday, October 23, the Nasdaq rose 0.2%, supported by gains in several major technology companies, according to the Associated Press. Thursday’s loss was thus followed by a modest rise in the next session.
Attention turns the following week to reports from Alphabet, Microsoft and Amazon, which Reuters described as among the most prominent company results expected during a busy week. This coincides with the Federal Reserve’s Federal Open Market Committee meeting on October 27 and 28, according to the central bank’s official calendar. The press conference is scheduled for October 28. The overlap between reports from major technology companies and the committee meeting puts AI spending and monetary policy at the forefront of the week’s focus. The meeting date does not determine the decision in advance.