US stocks fell sharply on Thursday as investors grew uneasy about the scale of AI-related spending by mega-cap technology companies and how quickly it can translate into profits. The Nasdaq led declines, while the S&P 500 retreated from recent record levels and the Dow also moved lower.
Microsoft was a major drag after its cloud performance failed to impress markets and as its capital spending jumped, reinforcing concerns that AI buildout costs are rising faster than near-term monetisation.
Broader software names also slid after cautious messaging from Europe’s SAP and a post-earnings drop in ServiceNow, feeding a narrative that traditional enterprise players may face heavier competition and pricing pressure in an AI-driven market.
By late session, reporting put the Nasdaq down about 2.1%, the S&P 500 down about 1.1%, and the Dow down around 0.4%, as investors recalibrated risk ahead of the next round of key earnings and policy signals.