Chip Stocks Crash 6.7% as Meta’s AI Spending Hits Big Tech

The chip index fell 6.72% and the Nasdaq 2.6% as Meta’s AI spending spooked Big Tech. Tesla slipped after results, oil topped $114, and the Fed meets next week.

TLDR

• The Philadelphia chip index fell 6.72% on Thursday, with all 30 of its stocks closing lower. Nvidia fell 4.40%, AMD 8.10% and Micron 6.26%.
• Meta fell 6.98% to $648.85 after its free cash flow turned negative on about $35 billion of AI spending in one quarter, even though it beat on sales and profit.
• The Nasdaq fell 2.6% to 26,008.86 and the S&P 500 fell 1.21% to 7,663.43, its worst day since July. The Dow rose slightly to 52,867.98.
• Tesla fell 3.08% to $374.58 after flat revenue, a 56% drop in operating income and a cut to its 2026 spending plan.
• Asia steadied on Friday. The Kospi closed up 0.30% at 5,550.30 after falling as much as 4.12%, and SK Hynix rose 4.42% after pausing a US listing of its Solidigm unit.
• Brent crude went above $114 for the first time since May. Next week brings the Fed decision on Wednesday and results from Microsoft, Alphabet and Amazon.

Market Regime

The question the market is asking has changed. For most of this year, investors rewarded companies for spending big on AI. On Thursday they punished it. Meta beat on revenue and profit, but it spent so much on data centers that its free cash flow turned negative, and the stock had its biggest drop since July. Nvidia’s Jensen Huang added to the worry when he said the demand for capital is much greater than what is available. Put together, traders started asking who pays for the AI build-out, and chip stocks took the hardest hit.

It was not a broad crash. Most US stocks actually rose on Thursday, the Dow finished slightly higher, Apple gained 1.23% and money moved into bonds, which pushed the 10-year Treasury yield back below 5%. That tells you the selling was aimed at the AI spenders and the chip makers that sell to them. What could change the picture is next week. The Fed decides on rates on Wednesday, and Microsoft, Alphabet and Amazon report their own spending plans. If those plans look more disciplined, chips have room to steady. If they rise again, Thursday’s pattern could repeat.

Bullish Factors

• Earnings are still beating: Western Digital, Bloom Energy, Lockheed Martin and Comcast all came in above estimates on Thursday.
• Memory demand looks solid: Huang said a surplus of memory supply is unlikely before 2029, which supports the longer-term case for memory makers.
• SK Hynix found a floor: It fell more than 5% early on Friday, then reversed to close up 4.42% after pausing the Solidigm listing that shareholders had worried would dilute their stake.
• Bond yields eased: The US 10-year yield fell back below 5% as money moved into safer assets, which helps rate-sensitive stocks.
• Money rotated, it did not leave: Apple rose 1.23% to $348.22, Blackstone jumped 8.38% after its results, and most US stocks closed higher.

Bearish Factors

• AI spending is outrunning cash: Meta spent about $35 billion on AI data centers in one quarter, and Huang said the need for capital is far greater than the money available.
• Chips broke lower: All 30 stocks in the Philadelphia chip index fell. SanDisk dropped 8.51% and AMD 8.10%.
• Good news is being sold: Western Digital and Bloom Energy both beat and raised their outlook, then fell about 6.5% to 7% after hours. Nokia fell 14.81% despite beating estimates.
• Oil at a five-month high: Brent went above $114 on US and Iran tension around the Strait of Hormuz, and a Trump envoy said the US is ready for a long stand-off.
• Japan may raise rates: Japan’s core inflation rose to 2.1%, above the Bank of Japan’s 2% target, keeping a rate rise in play.

Asian Markets This Morning

Asia opened sharply lower on Friday after Wall Street’s chip selloff, then clawed back most of the losses.

• Kospi: up 0.30% to 5,550.30, closing at its session high. It had fallen as much as 4.12% to 5,305.98 in the morning, after a 3.52% drop on Thursday.
• SK Hynix: up 4.42% after falling more than 5% early. It said Solidigm has halted its review of a pre-IPO round and a US listing, citing market conditions.
• Samsung Electronics: up 0.47%, after trading down more than 5% in the morning.
• Nikkei 225: down 0.34% to 62,693.11, after falling as much as 1.68% early.
• Hang Seng: closed higher after early losses.

What Moved Wall Street Today

Thursday was a tech selloff, not a market-wide one. The weakness in AI names was big enough to drag the S&P 500 and Nasdaq lower, while the rest of the market held up.

• S&P 500: 7,663.43, down 1.21%, its worst day since July.
• Nasdaq Composite: 26,008.86, down 2.60% or 694 points.
• Dow Jones: 52,867.98, up 0.02%.
• Russell 2000: 2,784.03, up 0.11%.
• Philadelphia chip index: down 6.72%. Nvidia fell 4.40% to $212.21, AMD 8.10%, Micron 6.26% and SanDisk 8.51%.
• Big Tech: Meta fell 6.98%, Amazon 4.57%, Alphabet 3.15% and Microsoft 2.23%. Apple rose 1.23%.
• Other big moves: Blackstone rose 8.38% on its results. Moderna fell 17.57% after its cancer vaccine data leaked early, and SpaceX fell 9.14% to $144.75, giving back Wednesday’s post-earnings gain.
• After hours: Western Digital fell about 6.5% and Bloom Energy about 6.9%, despite both beating estimates and raising their outlook.

Assets in Focus

NVDA

Nvidia fell 4.40% to $212.21 as the whole chip index sold off. Jensen Huang’s comments cut both ways. He said demand from new cloud companies is very strong and memory will stay tight until 2029, but also that the demand for capital is far greater than what is available. That second point is what traders reacted to. Next week’s spending plans from Microsoft, Alphabet and Amazon are the next real test. About $222, Wednesday’s close, is the price it needs to get back above.

META

Meta beat on sales and profit, but its free cash flow turned negative after about $35 billion of AI data center spending in a single quarter. It also announced new non-voting shares that work like a 2-for-1 stock split from January 2027. The stock fell 6.98% to $648.85, its biggest drop since July. $697.52, the close before earnings, is the level above.

TSLA

Tesla reported adjusted EPS of 48 cents, above the 43 cents expected, but revenue was flat at $28.05 billion and operating income fell 56% to $718 million on higher research and pay costs. It also cut its 2026 spending plan to about $20 billion from more than $25 billion, and Musk gave no update on the SpaceX merger talks. The stock fell 3.08% to $374.58 after closing at $386.47 on Wednesday.

SKHY

SK Hynix had the best recovery in Asia today. After falling more than 5% early, it closed up 4.42% once it paused the Solidigm listing. Analysts said the decision could lead to stronger shareholder returns. The stock had fallen more than 30% since the Solidigm IPO was first reported in late September. SK Hynix reports third quarter results on Wednesday morning, India time.

SPCX

SpaceX fell 9.14% to $144.75 on Thursday, giving back its post-earnings gain as the AI selloff spread. Tesla confirmed its committee to explore a deeper relationship with SpaceX, including a possible combination, and Semafor reported a merger could face antitrust review. $159.31, Wednesday’s close, is the level above.

Index Levels to Watch

• S&P 500 (7,663.43): 7,600 below, 7,757 above, Wednesday’s close.
• Nasdaq Composite (26,008.86): 25,800 below, 26,700 above, Wednesday’s close.
• Dow Jones (52,867.98): 52,500 below, 53,000 above.
• Kospi (5,550.30): 5,306 below, Friday’s intraday low, and 5,735 above, Wednesday’s close.

Disclaimer

Cryptocurrencies and futures are unregulated virtual assets, not legal tender, and subject to market risk. The information above is for education and general awareness only. It is not investment advice or a recommendation to buy, sell, or hold any asset. Levels and estimates are reference points for context, not entry or exit signals. Please do your own research and consult a registered advisor before making investment decisions.

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