US Nasdaq Falls as Investors Worry Over AI Spending

The Nasdaq slid nearly two-thirds of a percent ^[1] on Friday, July 24, 2026, as investors sold chip stocks.

This decline highlights a growing tension between the massive capital expenditures required for artificial intelligence and the immediate financial returns investors expect from megacap tech companies. As the market awaits the next wave of earnings reports, the ability of these firms to justify high spending is under scrutiny.

Market participants said they were anxious regarding the heavy costs associated with AI technologies ^[2]. This sentiment contributed to a broader atmosphere of uncertainty, which was further compounded by concerns over tariffs and geopolitical risks, including tensions involving Iran ^[3].

While the tech sector struggled, other areas of the market showed resilience. The Dow rose by just under half a percent ^[1], while the S&P 500 remained virtually flat ^[1]. The divergence between the indices suggests a rotation of capital away from high-growth tech stocks and into more stable, traditional industrial sectors.

Investors said they are eyeing the upcoming earnings reports to see if the revenue generated from AI services can offset the billions spent on hardware and infrastructure ^[2]. The volatility in chip stocks indicates that the market is no longer granting a blanket pass to AI-related spending without clear evidence of profitability ^[4].

This shift in sentiment comes as the broader economy navigates a complex landscape of trade policies and international instability ^[3]. The focus remains on whether the AI boom can sustain its momentum or if the current spending levels are creating a bubble that is beginning to leak.