Wall Street faced a sharp selloff on Thursday as investors questioned whether Big Tech’s massive investments in artificial intelligence will deliver strong returns.
Rising tensions in Iran, which lifted oil prices and clouded the global economic outlook, added to market pressure.
The Magnificent Seven technology companies lost a combined $797 billion in market value in one day, marking their biggest decline since the tariff-driven market selloff in April 2025. The S&P 500 fell 1.2%, while the Nasdaq 100 dropped 1.9%.
Investor concerns grew after Alphabet raised its 2026 capital spending forecast to $205 billion, far above expectations, even as the company’s AI investments pushed its cash flow into negative territory for the first time as a public company.
Tesla also unsettled markets after CEO Elon Musk said 2026 would be a “massive capex year,” despite the electric vehicle maker reporting profits well below analysts’ estimates.
Tesla shares plunged 15%, their steepest fall since March 2025, while Alphabet dropped 7.1%, its biggest decline since May 2025.
Microsoft, Amazon and Meta also slipped ahead of their upcoming earnings reports. Meanwhile, Apple recorded the smallest decline as investors welcomed its relatively cautious AI spending strategy.
Analysts said Wall Street is becoming less willing to reward aggressive AI investment without clear evidence that the spending will generate meaningful profits, marking a major shift in investor sentiment.
Wall Street faced a sharp selloff on Thursday as investors questioned whether Big Tech’s massive investments in artificial intelligence will deliver strong returns.
Rising tensions in Iran, which lifted oil prices and clouded the global economic outlook, added to market pressure.
The Magnificent Seven technology companies lost a combined $797 billion in market value in one day, marking their biggest decline since the tariff-driven market selloff in April 2025. The S&P 500 fell 1.2%, while the Nasdaq 100 dropped 1.9%.
Investor concerns grew after Alphabet raised its 2026 capital spending forecast to $205 billion, far above expectations, even as the company’s AI investments pushed its cash flow into negative territory for the first time as a public company.
Tesla also unsettled markets after CEO Elon Musk said 2026 would be a “massive capex year,” despite the electric vehicle maker reporting profits well below analysts’ estimates.
Tesla shares plunged 15%, their steepest fall since March 2025, while Alphabet dropped 7.1%, its biggest decline since May 2025.
Microsoft, Amazon and Meta also slipped ahead of their upcoming earnings reports. Meanwhile, Apple recorded the smallest decline as investors welcomed its relatively cautious AI spending strategy.
Analysts said Wall Street is becoming less willing to reward aggressive AI investment without clear evidence that the spending will generate meaningful profits, marking a major shift in investor sentiment.