Stock market today: Microsoft, Meta drag tech stocks lower on concerns over AI spending

US stocks fell sharply on Thursday, with the tech-heavy Nasdaq sliding almost 3% as Meta and Microsoft faced steep losses.

The tech sell-off was sparked by the latest earnings from mega-cap firms that mostly exceeded estimates but disappointed investors in other areas and exacerbated concerns about heavy investment in artificial intelligence.

The S&P 500 dropped almost 2% while the Dow Jones Industrial Average lost more than 370 points.

Here’s where US indexes stood at the 4:00 p.m. closing bell on Thursday:

• S&P 500: 5,705.37, down 1.86%

• Dow Jones Industrial Average: 41,763.19, down 0.9% (-378.35 points)

• Nasdaq composite: 18,095.15, down 2.76%

Much of the disappointment came down to the tech giants’ guidance.

Microsoft said it expects the current quarter’s revenue to come in between $68.1 billion and $69.1 billion, while analysts polled by FactSet had expected $69.89 billion. The company attributed the slowdown partially to its investment in cloud computing capacity for AI demand.

Microsoft’s stock fell 6% to close at $406.35.

Meta, meanwhile, said it expects a ramp up in capital expenditures in the next year as it continues to spend on AI, and raised its capex forecast for this year to a range of $38 billion to $40 billion, from $37 billion to $40 billion.

Analysts from UBS, though, remain positive that the increased spend will deliver.

“While Meta continues to signal a significant increase in CapEx for 2025, the results also highlighted multiple offsets to illustrate what the investments will start to bring – as we have been calling out previously, the easiest item to observe is the absolute step up in revenue dollar growth in 2024 which stands at ~$28B currently and nearly matching the Pandemic-driven acceleration from 2021 of ~$29B,” the analysts wrote in a Thursday note.

Meta’s shares lost 4% to close at %567.68.

Also on Thursday, investors digested the Federal Reserve’s preferred inflation gauge. The personal consumption expenditures index cooled to 2.1% year over year in September from 2.2% in August, but the core index—which excludes volatile food and energy prices—came in higher than forecasts at 2.7%.

Jobless claims, meanwhile, fell by more than expected to 216,000 last week, a fall of 12,000 from the week prior. Economists had expected 230,000 claims.

Here’s what else is going on:

• 3 reasons why surging gold prices will climb another 8% by the end of 2025, according to Goldman Sachs.

• AI hype is a bubble set to burst as it follows the path of tech manias throughout history, legendary investor Jeremy Grantham says.

• Coinbase CEO says next Congress will be the “most pro-crypto” ever and pledges another $25 million in political funding.

• Microstrategy is raising $42 billion — almost its entire market value — to buy more bitcoin.

In commodities, bonds, and crypto:

• Oil futures were up. West Texas Intermediate crude rose 2.8% to $70.53 a barrel. Brent crude, the international benchmark, climbed 0.8% to $73.17 a barrel.

• Gold rose slipped 1.6% to $2,756 an ounce.

• The 10-year Treasury was about flat at 4.278%.

• Bitcoin traded around $70,000.