US stocks tumbled on Thursday and the Nasdaq posted its steepest daily drop since early June as a batch of high-profile earnings reports ignited fresh fears about the AI spending race. The S&P 500 ended deep in negative territory. But the tech-laden Nasdaq, dragged down by microchips, suffered a steeper loss, falling 2.6 percent in the wake of a spate of high-profile AI-related earnings results. The blue-chip Dow eked out a nominal gain minutes before the closing bell. Meta Platforms' results beat analyst expectations, but its stock slid 7 percent as the Facebook parent posted its first cash outflow in more than a decade due to its AI-related expenditures and announced plans to issue non-voting shares in a two-for-one split to raise capital to spend on the nascent technology. Tesla shares fell 3.1 percent even though the electric car maker unexpectedly posted positive free cash flow in the quarter and cut its 2026 capital spending plans. The Philadelphia SE Semiconductor Index, which has driven much of the current bull market's gains, plunged 6.7 percent, its biggest daily percentage drop since June 23. "It's a wonderful day on Wall Street," said Paul Nolte, senior wealth adviser & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "The only part of the market that is really suffering here is technology, which has been the golden child of the markets up until about June." "Investors are starting to realise that there are some holes in the AI story," Nolte added. "And that's having an impact on the indices because they're so heavily weighted toward technology." On the geopolitical stage, Iran-backed Houthis launched new strikes against Saudi targets, sending crude prices to a five-month high. Investors worried that ongoing Middle East strife could keep inflation hot and force the US Federal Reserve to keep raising interest rates. Data from the US Labour Department showed initial claims for unemployment benefits kept drifting along near multi-decade lows. Signs of labour market stability will allow the Fed to focus on fighting inflation. Financial markets are currently pricing in the probability that the central bank will raise its policy rate by another 25 basis points before year-end. The Dow Jones Industrial Average rose 11 points, or 0.02 percent, to 52,867, the S&P 500 lost 93 points, or 1.2 percent, to 7,663 and the Nasdaq Composite lost 694 points, or 2.6 percent, to 26,008. Third-quarter earnings season is well underway, with 111 of the companies in the S&P 500 having reported. Of those, 83 percent have beaten analyst expectations, according to the most recent LSEG data. Procter & Gamble warned that rising cost pressures would take an increasing bite out of profit, but beat analyst estimates, sending the stock 5.6 percent higher and supporting consumer staples. Blackstone advanced 8.4 percent, after the company said widening credit spreads on AI-related debt could present an opportunity to lock in higher returns. Lockheed Martin climbed 7 percent after the aerospace/defence firm raised its annual sales and profit forecast. Spotify rose 11.1 percent after the Swedish music streaming firm forecast fourth-quarter profit above Wall Street estimates, betting on its AI-powered features to drive user growth. Chipmakers Intel, AMD, Sandisk and Marvell all tumbled more than 8 percent amid the broader semiconductor selloff. (Reuters) Edited by Cecil Wong