Key Highlights

● The Nasdaq Composite fell 694 points to 26,008.86, its steepest drop since June 5.

● Meta's spending plans and Lam Research's guidance sparked the chip and AI selloff.

● The drop ended a seven-session winning streak and erased about $1 trillion in value.

● The Dow finished flat while money rotated into staples, health care, utilities and homebuilders.

The Nasdaq Composite tumbled 694.00 points on Thursday, October 22, to close at 26,008.86, its steepest drop since June 5, according to market data. The tech-heavy index wiped out about $1 trillion in market value in a single session as investors dumped artificial-intelligence and chip stocks.

The selloff also snapped a seven-session winning streak, according to market data. The index had closed at 26,702.86 on Wednesday and finished Thursday well short of its record close of 27,599.89, set on October 6.

Meta's bill lands on the whole sector

The trigger came the evening before. Meta Platforms (NASDAQ:META) reported record quarterly revenue of $64.6 billion after Wednesday's close, but investors fixated on the cost of its AI ambitions. The company set its 2026 capital spending range at $135 billion to $145 billion, posted negative free cash flow of $2.12 billion, its first cash outflow in more than a decade, and disclosed about $825 billion in future spending commitments. The quarter also included a legal charge of about $10 billion tied to a settlement, according to reports. Meta was trading at $648.85, its worst day since July.

Lam Research (NASDAQ:LRCX) added to the gloom. Its December-quarter revenue guidance of $8.6 billion, plus or minus $400 million, had a midpoint slightly below what many investors had hoped for, and executives warned that supply-chain constraints would persist. The chip-equipment maker sank to about $230.

Nvidia (NASDAQ:NVDA) slid to $212.21 and was the single biggest drag on the S&P 500. Speaking at GTC Berlin, Nvidia CEO Jensen Huang said: "The demand of the capital is much greater than the availability of the capital."

A broad wave of chip selling

The damage spread quickly. Applied Materials (NASDAQ:AMAT), KLA (NASDAQ:KLAC), Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), Marvell Technology (NASDAQ:MRVL) and SanDisk (NASDAQ:SNDK) all fell sharply, with Intel, AMD, SanDisk and Marvell among the hardest hit. Micron Technology (NASDAQ:MU) dropped below $900, and AI-infrastructure names from CoreWeave (NASDAQ:CRWV) to Broadcom (NASDAQ:AVGO) retreated. The Philadelphia Semiconductor Index suffered its biggest one-day drop since June 23.

Breadth on the Nasdaq was poor. Decliners outnumbered advancers 2,766 to 2,022, according to market data, and the exchange logged 342 new lows against just 82 new highs. The Composite closed through both its 50-day and 100-day moving averages, at its lowest close since mid-September.

"Investors are starting to realize that there are some holes in the AI story," one strategist said.

Elsewhere, money found a home

The pain was concentrated. The Dow Jones Industrial Average ended essentially flat, up 11.89 points at 52,867.98, and the Russell 2000 crept higher. About two of every three S&P 500 stocks rose as investors rotated into consumer staples, health care, utilities and homebuilders. Treasuries rallied hard, sending the 10-year yield back below a closely watched threshold for the first time since September 22. Brent crude climbed to $113.17, its highest since May 4.

"The only part of the market that is really suffering here is technology," the strategist added.

Next Week's Tests for the AI Trade

Evening futures pointed to a quiet start, with Nasdaq-100 futures dipping slightly to 29,083.75 by 8:10pm ET, according to market data. Friday, October 23, brings S&P Global purchasing managers' surveys and the final University of Michigan sentiment reading. The bigger test arrives next week: Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and ServiceNow (NYSE:NOW) report on October 28, the same day as the Federal Reserve's decision, followed on October 29 by third-quarter GDP, September PCE inflation, and results from Amazon (NASDAQ:AMZN), Intel and Caterpillar (NYSE:CAT). Those reports will show whether the AI spending worries that crushed the Nasdaq on Thursday deepen or fade.