Thursday Edition · Thu 22 Oct 2026
Nasdaq Slides Up to 2.2% as Meta's New Non-Voting Shares and Tesla's Spending Plans Revive AI Cost Fears
A day after SpaceX and Super Micro lifted Wall Street, technology stocks reversed on Thursday. Meta fell about 7% after creating a new class of non-voting shares, Tesla slipped on its capital-spending outlook, and oil's jump to a five-month high pushed investors into defensive sectors.
Not investment advice: this article is for information only.
Chanan Zevin - Chief Editor and Head of Desks
Published
Thursday's reversal
US stocks fell to session lows on Thursday morning, led by technology, Yahoo Finance reported. By late morning in New York the Nasdaq Composite was down 2.2%, the S&P 500 had lost 1.2% and the Dow Jones Industrial Average was 0.3% lower. Chart 1 shows those moves. Earlier, at 09:41 ET, Reuters had the Nasdaq down 1.46% at 26,312.94, the S&P 500 down 0.81% at 7,694.03 and the Dow down 0.26% at 52,716.35. The figures are intraday, and closing levels may differ.
Wednesday's rally
Thursday's selling erased much of a strong Wednesday. On that day the Dow closed 0.69% higher at 52,856.09, the S&P 500 rose 0.58% to 7,757.17 and the Nasdaq gained 1.05% to 26,702.86, according to Upstox, citing market data. SpaceX shares jumped 7.79% to $159.31 after the company reported third-quarter revenue of $14.58 billion, up 161% from a year earlier. Nvidia rose 2.54%, AMD 3.36% and Super Micro Computer 9.54%. The mood then was that AI spending was finally turning into revenue.
Meta beats but falls
Meta's third-quarter results beat expectations. Revenue was $64.60 billion against analyst estimates of $63.37 billion and $51.24 billion a year earlier, and earnings per share were $3.83, Upstox reported. The company guided fourth-quarter revenue of $73 billion to $76 billion. Yet its shares fell 6.7% on Thursday, Reuters reported. The reason was not the numbers but the structure: Meta announced a two-for-one stock split that gives Class A holders one new non-voting Class C share, which Reuters said is meant to help fund its costly AI expansion.
Why the share class matters
A non-voting share class lets a company raise capital or pay staff in stock without diluting the control of existing voting holders. For Meta, where Mark Zuckerberg already controls a majority of votes, the move strengthens that control. Investors read it as a signal that the company expects to keep spending heavily on AI and wants flexible ways to pay for it. That reading turned a strong quarter into a sell-off, because the market's main worry is the cost of AI rather than demand for it.
Tesla's capex message
Tesla also reported an earnings beat, but its shares were volatile, Yahoo Finance said. The company lowered its capital-expenditure forecast for 2026 while signalling higher spending in 2027 and 2028 on its Optimus robot, the Cybercab robotaxi and a chip project called Terafab. Reuters reported the stock down 1.9%. Investors are trying to judge whether the lower near-term spending means slower progress or better discipline. Both readings are possible, and the market has not settled on one.
The SpaceX and Tesla question
Elon Musk said on SpaceX's earnings call that special committees have been formed to discuss a merger of SpaceX and Tesla, according to Upstox. Reuters separately reported, citing people familiar with the matter, that some Tesla insiders are worried Musk's public comments could invite shareholder scrutiny and complicate talks. SpaceX shares fell 3.9% on Thursday after their Wednesday surge. A combination of two Musk-led companies would raise governance questions for both sets of shareholders.
Chipmakers under pressure
The selling spread across semiconductors. Intel fell 5.3%, while AMD, Qualcomm, Marvell Technology, Broadcom and Micron dropped between 1.9% and 5.2%, Reuters reported. Nvidia and Amazon were each down about 2%. Super Micro fell 3.4% a day after its big gain. These swings show how sensitive the sector has become to every signal about AI budgets. One strong day can be followed by an equally sharp reversal.
Valuations as the weak point
Brendon Dashiell of Bogart Wealth told Reuters that AI stocks are vulnerable because their valuations are already high, so any small setback can cause a big decline. He said markets are likely to stay choppy but that he remains cautiously optimistic. That view fits the pattern of the past two days. The underlying earnings are strong, but expectations are higher still, and the market is punishing anything that suggests heavier spending or weaker returns.
Growth versus value
The rotation was clear in the style indexes. The S&P 500 value index was flat while its growth counterpart dropped 1.4%, according to Reuters. Six of the 11 S&P 500 sectors fell, led by technology, which lost 1.6%. Consumer staples and healthcare were the biggest gainers as investors sought defensive positions. The CBOE Volatility Index jumped after three straight sessions of declines.
Oil and bonds
The wider backdrop added to the caution. A report that the US and Israel are preparing for renewed attacks on Iran after the midterm elections sent Brent crude to around $112 a barrel, Yahoo Finance reported. Treasury yields fell as investors bought bonds, with the 10-year yield near 5.04%, according to Reuters. Higher oil raises costs for many companies, while lower yields offer some support to valuations. On Thursday the first effect dominated.
Winners outside tech
Not every company fell. Lockheed Martin climbed 9.4% after raising its annual sales and profit forecasts, and Spotify rose 8.7% after projecting fourth-quarter profit above estimates, Reuters reported. Blackstone gained 2.3% despite lower quarterly earnings. IBM fell 1.4% even after raising its software revenue forecast. The mixed reactions show that investors are judging each report on its guidance and on how it fits the AI story.
Earnings growth remains strong
The broader earnings season is still very strong. S&P 500 third-quarter earnings growth is now forecast at 32.3%, up from 30.7% earlier, according to LSEG data cited by Reuters. Weekly jobless claims fell to 194,000, the lowest in three months, Yahoo Finance reported. The economy and corporate profits are not the problem. The market's concern is whether the enormous investment in AI will earn an adequate return.
Market breadth
Breadth was only modestly negative. Declining issues outnumbered advancers by 1.08 to 1 on the NYSE and 1.18 to 1 on the Nasdaq, Reuters reported. The S&P 500 posted 24 new 52-week highs and three new lows, while the Nasdaq recorded 31 new highs and 151 new lows. That suggests a concentrated sell-off in large technology names rather than a broad retreat.
Meta's frontier model
Meta's results also carried a product message. Mark Zuckerberg said in the earnings release that the company hit major milestones toward what he called personal superintelligence, including the launch of Muse and Muse Wonder, which he described as Meta's first frontier model, Upstox reported. He said the investments are paying off and the core business is strong. The market accepted the revenue numbers but questioned the bill. Building and running frontier models requires very large data-centre budgets, and the new share class suggested those budgets will keep rising.
SpaceX's AI business
SpaceX's quarter showed how far AI now reaches beyond traditional technology companies. Chief financial officer Bret Johnsen said revenue growth was fuelled by Starlink connectivity and what he called a clear inflection in the company's superintelligence business, according to Upstox. Operating income was $2.8 billion and net income $4.4 billion, compared with a net loss of $1.05 billion a year earlier. Investors cheered those figures on Wednesday. On Thursday they focused instead on the capital needed to sustain that growth, and the stock gave back part of its gain.
A familiar pattern
The past two sessions follow a pattern seen several times this autumn. Strong results from one group of AI-linked companies spark a rally, and then spending plans or financing questions from another group reverse it. Earlier editions of the Journal reported similar swings in Asian chip stocks. The repetition suggests investors have not yet found a stable way to value companies whose profits depend on very large, long-term investment. Until they do, sharp daily moves in both directions are likely to continue.
Labour market strength
The jobs data reinforced the picture of a resilient economy. Weekly jobless claims fell unexpectedly, Reuters reported, which supports expectations that the Federal Reserve will keep rates unchanged at next week's meeting. Low layoffs help consumer spending and corporate revenue. They also reduce the chance of early rate cuts, which matters for richly valued growth stocks.
What to watch
Investors will look to the close for confirmation of Thursday's move, then to next week's Federal Reserve meeting and further megacap earnings. The Journal will report closing levels and avoid treating one session as a trend. For now, the message of the past two days is that strong results are not enough when spending plans keep rising.
Sources
- Yahoo Finance, Stock market today: Dow, S&P 500, Nasdaq tumble as oil climbs, 22 Oct 2026 · finance.yahoo.com
- Reuters via Devdiscourse, Nasdaq leads Wall Street lower on AI spending jitters, 22 Oct 2026 · devdiscourse.com
- Upstox, US markets end higher as SpaceX earnings fuel fresh optimism around AI, 22 Oct 2026 · upstox.com
- The Wall Street Journal, Stock Market Today live coverage, 22 Oct 2026 · wsj.com
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