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US tech stocks fell on Thursday as blockbuster earnings from Nvidia failed to calm investors’ jitters about a possible bubble in AI spending.
Wall Street’s tech-heavy Nasdaq Composite index dropped 1.5 per cent on Thursday morning, with the chipmaker falling 4.9 per cent, meaning both are now in negative territory for 2026. The broader S&P 500 was 0.7 per cent lower.
Nvidia’s fourth-quarter earnings, released after the market closed on Wednesday, showed stronger than expected revenues and surging profits, prompting shares to initially rise in after-hours trading.
However, investors soon grew nervous as the company’s “conference call offered limited detail on the revenue outlook”, said Jim Reid, global head of macro research at Deutsche Bank.
Tech stocks have suffered a number of sell-offs in recent weeks as concerns over mega caps’ high spending on the AI build-out collided with fears that the technology could disrupt entire sectors including software.
The S&P’s software sub-index has lost $1tn in combined market capitalisation since late January.
Dan Hanbury, portfolio manager at asset manager NinetyOne, said: “What is weighing heavy on investors’ minds is how Nvidia can maintain its phenomenal growth rate now its core customers — the hyperscalers — are mostly depleting their cash flows [by] spending on AI-related capex.”
“The debate has shifted away from near-term results and towards the sustainability of AI capex spending,” said Richard Clode, a tech portfolio manager at Janus Henderson.
Mike Zigmont, co-head of trading at Visdom Investment Group, said: “Maybe the super lucrative appreciation phase of this AI investment story is now over . . . they won’t be the eye-popping returns of the past couple of years, so I think you’ve got people bailing out.”
Nvidia’s share price has lacked upwards momentum in recent months, while positive earnings revisions mean the company is now trading at “a significant discount to AI peers”, Clode added.
Frank Lee, global head of tech hardware and semiconductor research at HSBC, said that while Nvidia’s results had beaten “even our bullish expectations” there was a lack of “new narratives” about growth areas for the business.
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