Tech stocks slide as Alphabet’s record plunge revives AI fears

Tech stocks experienced a significant drop on Thursday after Alphabet's record plunge reignited concerns about the potential threat of artificial intelligence to its core business. The tech-heavy Nasdaq 100 fell 1.4%, while the S&P 500 declined by 0.3%, ending a three-day winning streak for both indexes. Alphabet's shares plummeted by 13%, marking the company's worst-ever single-day drop and the second-largest market value loss in one day for any US stock, following a disappointing report on search and advertising sales that intensified worries about AI's impact on its primary business.

Michael O'Rourke, a market strategist at JonesTrading Institutional Services LLC, commented that Google is "playing the AI Hunger Games from a position of weakness" after missing key forecasts.

Notably, chip stocks and software companies also suffered on Thursday, with the Philadelphia Semiconductor Index falling 1.4%. ServiceNow and Fortinet, both software companies, suffered the largest declines on record, with ServiceNow dropping 27% and Fortinet losing 20%. Microsoft, on the other hand, reported strong earnings after the close, with impressive growth in its cloud business and controlled capital expenditures.

However, even after achieving blowout demand for its $25 billion bond offering, the company's shares still fell by 0.2%.

Meanwhile, Caterpillar's shares dropped by 9.3%, marking the worst decline since March 2020, after the company's third-quarter earnings only slightly exceeded expectations. Other indexes were also negatively impacted, with DoorDash shares rising 5.6% after reporting earnings above estimates and announcing a $17 billion deal to acquire Instacart.

President Donald Trump's comments on the war in Iran, which he believes will soon conclude, also contributed to the market's overall decline, following a Wall Street Journal report about the US' plan to conduct a quick military campaign after the midterm elections.