Nasdaq Falls 2% as Tech Stocks Lead Wall Street Lower on AI Spending Fears
TLDR
- The Magnificent Seven stocks lost nearly $800 billion in market value on Thursday
- Alphabet and Tesla’s heavy AI spending spooked investors, triggering a broad sell-off
- Trump’s new Section 301 tariffs of 10–12.5% hit 60 trading partners, including the UK, China, and Japan
- Oil prices surged past $100 a barrel, raising inflation fears ahead of next week’s Fed meeting
- Nasdaq and S&P 500 futures attempted to stabilize Friday after sharp Thursday losses
Wall Street closed sharply lower on Thursday after Alphabet and Tesla reported high AI spending with uncertain returns. The sell-off wiped nearly $800 billion from the Magnificent Seven group of megacap tech stocks.
Tesla fell close to 15%. Alphabet dropped more than 7%. Both stocks steadied somewhat in after-hours trading.
The Nasdaq Composite fell more than 2% on the day. The S&P 500 dropped 1.2% and the Dow Jones fell around 1%.
AI Spending Concerns Drive the Sell-Off
Investors reacted badly to both companies flagging rising costs tied to building out artificial intelligence infrastructure. The concern is simple: the spending is large, and the returns are not yet clear.
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