Thursday | Nasdaq plunges 2.6%, AI spending worries return, and oil reaches a five-month high
Wall Street suffered another technology-led selloff Thursday as investors grew increasingly concerned about the enormous costs of artificial intelligence.
The Nasdaq Composite plunged approximately 2.6%, the S&P 500 fell 1.2%, and the Dow Jones Industrial Average was little changed.
The decline reversed Wednesday’s technology rally and followed quarterly earnings reports from Tesla and Meta, two companies making substantial investments in artificial intelligence, robotics and advanced computing.
CoreWeave sank 10% as concerns about its debt-heavy business model resurfaced. Meta fell nearly 7% as investors questioned the cost of its AI expansion.
Meanwhile, Brent crude surged to $113 per barrel amid renewed Middle East tensions, and investors moved into US Treasury bonds, pushing yields lower.
The market’s message is becoming clearer: Investors believe in artificial intelligence, but they’re increasingly concerned about how much companies are spending to develop it.
Market performance
Dow Jones
Near flat
Thursday, Oct. 22
S&P 500
−1.2%
Thursday, Oct. 22
Nasdaq
−2.6%
Thursday, Oct. 22Approximate market moves from the supplied Thursday update.
1. Technology Stocks Reverse Wednesday’s Rally
Wednesday had offered technology investors some relief.
The Nasdaq gained approximately 1.1%, supported by enthusiasm following SpaceX’s quarterly earnings.
But that optimism proved short-lived.
On Thursday, the Nasdaq fell 2.6%, more than erasing Wednesday’s advance.
The S&P 500 also declined sharply, while the Dow remained relatively stable.
This divergence reflects a continuing rotation away from technology stocks.
Investors are becoming more cautious about companies whose valuations depend heavily on future growth, particularly businesses requiring enormous investments in AI infrastructure.
Higher financing costs, uncertain returns and aggressive spending plans are making investors question whether current stock prices are justified.
The AI industry may continue growing rapidly.
But that doesn’t mean every AI-related company will generate attractive shareholder returns.
2. Meta Falls Nearly 7% as Investors Question AI Spending
Meta: Approximately −7%
Meta was one of Thursday’s biggest technology losers following its quarterly earnings report.
Investors were particularly concerned about the company’s substantial investments in AI infrastructure.
Meta also announced a 2-for-1 stock split.
Meta operates Facebook, Instagram, WhatsApp and other digital platforms.
Its primary source of revenue is advertising.
The company has been investing heavily in AI to improve advertising targeting, recommendations and user engagement.
It is also spending enormous sums on data centers, computing equipment and AI models.
These investments could strengthen Meta’s competitive position.
But investors want evidence that the spending will generate attractive financial returns.
A company can report strong revenue and earnings while still disappointing investors if its future spending plans appear too aggressive.
That’s an important distinction.
Revenue growth is valuable, but return on invested capital determines whether growth creates shareholder value.
What about Meta’s stock split?
Meta’s announced 2-for-1 stock split would double the number of shares held by investors while approximately halving the price per share, all else equal.
A shareholder owning 10 shares before the split would own 20 afterward.
The total value of the investment wouldn’t change simply because of the split.
Stock splits can make shares more accessible to some investors, but they don’t directly increase a company’s profits or intrinsic value.
3. CoreWeave Plunges Another 10%
CoreWeave: Approximately −10%
CoreWeave continued its volatile October performance as concerns about debt financing returned.
The Nvidia-backed AI cloud provider fell sharply Thursday, highlighting the financial risks associated with capital-intensive AI infrastructure.
CoreWeave rents powerful computing resources to AI developers.
Its business requires enormous investments in processors, servers, data centers and electricity infrastructure.
Much of that expansion has been financed through borrowing.
The challenge is that debt must be serviced regardless of whether future revenue meets expectations.
If AI demand grows rapidly and computing capacity remains fully utilized, the company’s investments could produce attractive returns.
But if demand slows, equipment becomes obsolete faster than expected, or borrowing costs remain elevated, the financial risks increase.
CoreWeave’s recent volatility illustrates how quickly investor enthusiasm can change.
Last week, the stock lost more than 25%.
Earlier this week, Goldman Sachs upgraded the shares.
Yet Thursday’s decline shows that investors remain deeply concerned about the company’s financial structure.
The broader lesson is that technological opportunity and investment quality are not necessarily the same thing.
4. Tesla Beats Earnings Expectations, but Spending Plans Raise Questions
Tesla reported third-quarter earnings that exceeded expectations.
The company also generated positive free cash flow and projected lower capital expenditures for 2026 than investors had anticipated.
However, its plans for substantially higher spending in 2027 and 2028 introduced new questions.
Tesla is preparing to invest heavily in several ambitious projects.
Optimus: Tesla’s humanoid robot program, intended to develop robots capable of performing physical tasks.
Cybercab: Its autonomous transportation initiative, which aims to expand the company’s role beyond conventional vehicle manufacturing.
Terafab: A proposed semiconductor manufacturing initiative that could increase Tesla’s control over advanced computing hardware.
These projects could create substantial long-term opportunities.
But they also require significant capital.
And many of the potential benefits remain uncertain.
Investors must consider not only whether Tesla can develop these technologies, but also whether it can commercialize them profitably.
Tesla’s earnings demonstrate the tension between short-term financial performance and long-term investment ambitions.
Strong quarterly results are encouraging.
But ambitious spending plans can make investors cautious, especially when interest rates remain elevated.
5. SpaceX Gives Back Part of Wednesday’s Gains
SpaceX shares declined Thursday, surrendering more than half of Wednesday’s post-earnings gain, according to the supplied report.
The reversal reflected the broader technology selloff rather than a newly announced deterioration in the company’s operations.
Wednesday’s enthusiasm followed SpaceX’s strong quarterly results and discussion of a possible merger with Tesla.
But Thursday’s decline demonstrates how quickly market sentiment can shift.
Even companies reporting impressive growth can experience sharp price declines when investors become concerned about valuations or broader market conditions.
SpaceX operates in capital-intensive industries, including rocket launches, satellite communications and space transportation.
Like other rapidly expanding technology companies, it must balance ambitious investment plans with financial sustainability.
6. Blackstone Rallies 8% Despite Weaker Earnings
Blackstone: Approximately +8%
Blackstone provided a striking contrast to the technology selloff.
Shares of the alternative asset manager climbed approximately 8% despite weaker third-quarter earnings.
Why would a company’s stock rise after disappointing earnings?
Because investors care about future expectations.
Blackstone expressed optimism about upcoming investment sales, suggesting that the company may be able to realize gains from assets held in its investment portfolios.
Higher interest rates have made financing acquisitions more expensive and complicated the sale of some investments.
But improving opportunities to sell assets could help Blackstone generate performance-related revenue and return capital to investors.
The positive outlook apparently mattered more to investors than the weaker historical earnings.
It’s another reminder that stock prices reflect expectations about future profitability.
7. Oil Surges to a Five-Month High
Brent crude
$113
Per barrel — five-month high
WTI crude
~$100
Per barrel
Oil prices surged Thursday amid renewed concerns about conflict in the Middle East.
Reports suggested that the United States and Israel were preparing for possible renewed attacks on Iran after the US midterm elections.
These reports describe potential future military action, not a confirmed decision.
Meanwhile, a deadly attack at a Saudi Arabian airport and oil field increased concerns about the security of regional energy infrastructure.
Brent crude climbed to approximately $113 per barrel, while West Texas Intermediate reached about $100.
The rise in energy prices creates another challenge for financial markets.
Higher oil prices increase transportation and production costs.
They can reduce consumer purchasing power.
And they can keep inflation elevated.
This is particularly problematic because last week’s inflation reports had already raised concerns about additional Federal Reserve interest-rate increases.
If energy prices remain high, the Fed may face greater difficulty bringing inflation under control.
8. Investors Seek Safety in Treasury Bonds
As technology stocks declined, investors moved into US Treasury bonds.
Increased demand pushed bond prices higher and Treasury yields lower.
The relationship between bond prices and yields is inverse.
When investors buy existing bonds, their prices rise, and the yields available to new buyers decline.
Treasuries are often considered relatively safe assets because they’re backed by the US government.
During periods of market uncertainty, investors may reduce exposure to volatile stocks and increase their holdings of government debt.
Lower Treasury yields can eventually help support stock valuations.
But the reason yields are falling matters.
If they’re declining because investors fear a slowdown or financial instability, that may not be a positive signal for the economy.
Thursday’s bond rally reflected a renewed desire for safety.
9. Jobless Claims Fall to 194,000
One encouraging economic development came from the labor market.
Initial US unemployment claims fell to 194,000, the lowest level in approximately three months.
Weekly initial unemployment claims
194,000
Lowest in approximately three months
Initial jobless claims measure the number of people filing for unemployment benefits for the first time.
Lower claims generally suggest that employers are laying off fewer workers.
This is encouraging because employment is a major driver of consumer spending.
But a strong labor market can also complicate Federal Reserve policy.
If employment remains resilient while inflation is elevated, the Fed may feel less pressure to reduce interest rates.
That creates a complicated environment for investors.
The economy may remain strong enough to avoid a recession.
But interest rates could stay elevated longer than technology companies would prefer.
10. What I’m Watching Next
Three developments could determine whether Thursday’s selloff continues.
AI capital spending: Investors will examine whether companies such as Meta, Tesla and CoreWeave can justify their enormous investments with future earnings and cash flow.
Oil prices: Brent crude at $113 increases the risk of renewed inflation pressure. Any further escalation in the Middle East could push energy prices higher.
Treasury yields and the Federal Reserve: Falling bond yields may offer some relief, but persistent inflation could limit the Fed’s ability to reduce interest rates.
The technology sector remains vulnerable to rapid changes in sentiment.
Investors are no longer willing to reward every ambitious AI investment announcement.
They increasingly want evidence of financial returns.
The Bottom Line
| Indicator | October 22 |
|---|---|
| Dow Jones | Near flat |
| S&P 500 | −1.2% |
| Nasdaq | −2.6% |
| CoreWeave | Approximately −10% |
| Meta | Nearly −7% |
| Blackstone | Approximately +8% |
| Brent crude | ~$113/barrel |
| WTI crude | ~$100/barrel |
| Initial jobless claims | 194,000 |
| Treasury yields | Lower |
Thursday’s selloff demonstrated that the market remains deeply divided about artificial intelligence.
Investors continue recognizing the technology’s transformative potential.
But they are becoming increasingly concerned about the cost of building the infrastructure required to support it.
Meta’s earnings, Tesla’s future spending plans and CoreWeave’s debt problems all reinforce the same concern.
Meanwhile, rising oil prices and geopolitical tensions threaten to keep inflation elevated.
Blackstone’s rally and resilient jobless claims offered some positive counterpoints, but they weren’t enough to prevent a sharp decline in technology stocks.
The AI revolution may be one of the greatest technological transformations in history. But investors are discovering that an extraordinary technology doesn’t automatically make every company involved an extraordinary investment.
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