Nasdaq Composite falls 1.38 percent as AI spending concerns return

The Nasdaq Composite ended Thursday's session at 26,184.72, according to Nasdaq. The index lost 365.13 points, equivalent to 1.38 percent, from its October 28 close of 26,549.85. It traded between 26,053.16 and 26,286.46 during the session.

AI spending concerns hit technology shares

The decline followed Alphabet's quarterly results, released after Wednesday's close. Reuters reported that the company missed revenue expectations and that accelerated artificial intelligence-related cash spending intensified concerns about the returns on large technology investments. Alphabet shares fell 12.6 percent, weighing on the communication services sector.

Semiconductor stocks also weakened, with the Philadelphia Semiconductor Index losing 1.4 percent and ending a four-session winning streak. Software shares were under pressure as well: Reuters reported declines of more than 20 percent for Fortinet and ServiceNow after their quarterly results, while Marvell Technology fell 13.2 percent amid reports of advanced talks to acquire Lumentum Holdings.

Economic data keeps rate outlook in focus

Investors also assessed new economic data after the Federal Reserve left its policy rate unchanged on Wednesday. Third-quarter US economic growth came in at an annualized 3.4 percent, according to Reuters, ahead of the 3.1 percent consensus cited in the report. September personal consumption expenditures inflation rose 3.6 percent year over year, while core PCE inflation increased 3.1 percent.

The combination of resilient growth and still-elevated inflation left the timing of the next Federal Reserve move as an important market consideration. The rate decision itself was not a new event during Thursday's session; rather, investors incorporated the newly released data into expectations for December policy.

Nasdaq closes lower across the major indexes

The Nasdaq Composite's 1.38 percent fall was the largest among the three major US equity indexes. The S&P 500 declined 0.30 percent to 7,720.39, while the Dow Jones Industrial Average fell 0.25 percent to 52,342.56, based on the Reuters closing report. The Nasdaq's retreat also ended a three-session advance.

For investors, Thursday's move highlighted the index's sensitivity to changes in expectations for large technology companies and the capital required to build artificial intelligence infrastructure. The session did not establish whether the sector's long-term investment cycle has ended, but it showed that disappointing results and higher spending can quickly challenge valuations. Further Nasdaq Composite coverage is available on this topic page.