AI stocks drag Wall Street lower as spending costs and uncertain returns unsettle investors

AI and technology stocks pulled Wall Street lower on October 22, 2026, as investors questioned the spending behind the industry’s expansion. The Nasdaq Composite fell 1.46% in early trading. Earnings from Tesla and Meta failed to ease concerns about expensive investment and how long companies might wait for returns, Reuters reported.

At 9:41 a.m. Eastern time, the Nasdaq stood at 26,312.94. The S&P 500 was down 0.81%, while the Dow Jones Industrial Average slipped 0.26%. The larger decline in technology-heavy shares also appeared in the S&P 500’s investment styles: its growth index fell 1.4%, while its value index was flat.

The selling reversed some of Wednesday’s optimism. Strong results from SpaceX and Super Micro had helped lift the Nasdaq in that session. On Thursday morning, those stocks fell 3.9% and 3.4%, respectively, as attention shifted back to the cost of AI investment and uncertain timelines for returns.

Different spending signals, the same market reaction

Meta fell 6.7% in Reuters’ morning update after introducing new non-voting shares to help finance its AI expansion. Tesla declined 1.9% after cutting its annual capital expenditure forecast—the money it expects to spend on long-term assets. That reduction raised questions about the pace of its AI and robotics ambitions.

Their quarterly results were mixed, rather than uniformly weak. Meta’s revenue exceeded analysts’ expectations, but profit missed them. Tesla reported better-than-expected profit and weaker-than-expected revenue, according to the Associated Press. Neither company’s encouraging figures prevented its stock from joining the morning’s technology retreat.

The thing that makes these AI names more vulnerable is just that they have such high valuations already. So any kind of little trip up in the market is going to cause a big decline in some of these stocks

Brendon Dashiell, portfolio manager for investment research at Bogart Wealth, speaking to Reuters

A small forecast miss meets a large rally

Lam Research offered a sharp example of that sensitivity. The semiconductor equipment and services supplier reported summer-quarter profit and revenue slightly above analysts’ expectations. But the midpoint of its profit forecast for the final three months of 2026 was slightly below expectations. Its shares tumbled 10.1% in AP’s early-morning account.

Lam entered Thursday with a 52.4% gain for the year, nearly four times the S&P 500’s advance. AP pointed to that run-up as leaving room for disappointment. The company was still reporting growth; the market reaction followed a forecast that fell modestly short of what analysts had anticipated.

The pressure reached across chip suppliers, not just companies releasing earnings. Reuters’ morning update showed declines in processors, memory and other semiconductor names:

• Nvidia fell about 2%, alongside a similar decline in Amazon.
• Intel dropped 5.3%, a steeper fall than the broader technology sector.
• AMD, Qualcomm, Marvell Technology, Broadcom and Micron Technology lost between 1.9% and 5.2%.

Borrowing adds another pressure point

AP identified expensive borrowing to build data centers and buy AI chips as another source of investor unease. CoreWeave, which borrows to purchase Nvidia chips and rents their computing power to cloud customers, fell 3.6% in its snapshot. Concerns about debt had already made the stock particularly volatile in recent weeks.

The retreat was not evenly spread across Wall Street. Six of the S&P 500’s 11 sectors declined, with technology down 1.6%. Consumer staples and healthcare were the strongest sectors as investors sought more defensive holdings. Even within a falling market, the day’s sharpest pressure remained concentrated in technology and growth shares.