Wall Street Demands AI Profit Proof as Tech Stocks Slide

U.S. stocks fell sharply Thursday as Meta and chip equipment makers' earnings fueled doubts about AI spending sustainability, with the S&P 500 down 1.2% and Nasdaq 100 plunging 2.9%. Meta dropped 7% despite beating revenue expectations, as capital expenditures hit $35 billion, exceeding operating cash flow and pushing free cash flow to -$2.1 billion. The Philadelphia Semiconductor Index fell 6%, with Lam Research down 12% on weak guidance. Investors rotated into defensive stocks, with consumer staples up 2.9% and Treasury yields falling. Middle East tensions pushed Brent crude near $115, while markets now see a 92.8% probability the Fed holds rates steady next week.