Nasdaq drops 2.68% as AI spending fears hit stocks

US stocks tumbled Thursday, with the Nasdaq falling 2.68% in its steepest daily drop since early June, driven by fresh fears over the AI spending race following high-profile earnings reports. Meta slid 7.5% despite beating expectations, posting its first cash outflow in over a decade due to AI expenditures and announcing a share split to raise capital. The Philadelphia SE Semiconductor Index plunged 6.3%, its biggest drop since June, while Tesla fell 2.1% despite positive cash flow. Crude prices hit a five-month high after Houthi strikes on Saudi targets, fueling inflation worries and potential Fed rate hikes. Despite 83% of S&P 500 reporters beating estimates, investors remain hypersensitive to AI-related earnings and uncertain returns.