U.S. stocks sold off sharply on Thursday as investors pulled back from technology shares that had led gains this year. The Nasdaq Composite fell 5.5% to 24,315, its largest one-day percentage decline since April 2025. The index is now more than 10% below its recent high of 27,599.79, set on October 6, putting it in correction territory. The Cboe Volatility Index (VIX), which tracks expected market volatility, rose to its highest level since March.
The Dow Jones Industrial Average dropped 3.4% to 51,523, while the S&P 500 fell 4.4% to 7,353. All 11 S&P 500 sectors closed lower, with information technology posting the biggest decline. Investors focused on valuations for AI-linked stocks, the outlook for data-center construction and whether large corporate AI investments can generate sustained returns.
AI and memory-chip stocks lead losses
Memory-chip makers that had rallied this year on expectations of rising AI demand were among the hardest hit. Micron Technology fell 17.5% and Sandisk lost 22.3%, after their shares had climbed to roughly three and four times their earlier levels this year, respectively. Nvidia declined 9.3%, its steepest one-day drop since January 27, 2025, when the stock fell 17% amid the market reaction to DeepSeek.
Cloud-computing giants that have announced large AI investment plans also fell. Alphabet slipped 2.2%, Meta Platforms lost 4.0% and Microsoft dropped 3.6%. Concerns that data-center expansion could face policy and local opposition added to questions about construction timelines and the returns on companies’ capital spending.
David Bahnsen, chief investment officer at The Bahnsen Group, said the pullback reflected both a gap between technology stock valuations and fundamentals and the optimism around AI that had pushed share prices higher. He said valuations in the sector remained elevated and did not view the day’s decline as a clear buying opportunity, pointing instead to areas such as consumer staples and energy, where cash flows are relatively stable. Bahnsen’s comments reflect his market view, not a consensus assessment.
Qualcomm beats earnings estimates but gives a softer forecast
Qualcomm fell 9.5% on Thursday, weighed by the broader market decline and a next-quarter outlook that came in slightly below analysts’ expectations. The company reported fiscal fourth-quarter earnings of $2.17 per share on revenue of $10.4 billion, beating Wall Street estimates on both measures.
For the first quarter of fiscal 2027, however, Qualcomm forecast midpoint earnings of $2.25 per share, just below analysts’ $2.27 estimate. Oppenheimer analyst Rick Schafer said Qualcomm has strengths in baseband chips and integrated single-chip solutions, but remains reliant on the smartphone market, where growth is slowing and competition is intensifying.
Qualcomm is expanding into areas including data centers. Schafer said he would remain on the sidelines and keep a “Hold” rating until growth beyond the company’s core handset business becomes more apparent.
AppLovin jumps 31% after strong results
AppLovin bucked the broader tech sell-off, surging 31% for its largest one-day gain in two years. The mobile advertising platform reported third-quarter earnings of $4.30 per share, up 76% year over year, while revenue rose 55% to $2.18 billion. Both figures exceeded analyst expectations.
Wedbush analyst Alicia Reese said the quarter was an important test of AppLovin’s performance and that the results met expectations. She maintained an “Outperform” rating and raised her price target from $560 to $600. Reese also noted that the fourth quarter is typically a seasonal high point for advertising, with e-commerce ads potentially contributing more to AppLovin’s revenue.
Thursday’s contrasting moves underscored how company-specific results and guidance can drive sharp differences among stocks, even as a broad pullback in risk appetite weighs on the market.