Alphabet's sharp share price decline dragged the technology sector lower, as the Google parent's disappointing earnings report once again fueled investor concerns that artificial intelligence is threatening its core business.
The tech-heavy Nasdaq 100 fell 1.4%, while the S&P 500 dropped 0.3%, with both indexes ending three consecutive sessions of gains. Alphabet shares tumbled 13%, marking the largest single-day decline in the stock's history and the second-largest single-day market value loss for any U.S. company on record.
Stocks outside the technology sector broadly advanced, with roughly 400 S&P 500 constituents gaining ground, and the equal-weighted S&P 500 index rising 1.2%. Chris Larkin of E*Trade wrote: "Uncertainty surrounding AI may not be over yet, but the impact on the broader market has so far been limited."
The latest batch of earnings reports has once again raised questions about the AI trade, with the market doubting whether massive AI spending can generate returns quickly enough to justify elevated valuations. Amazon's post-market earnings on Thursday showed higher-than-expected capital expenditure, sending its shares lower after hours.
Chip stocks came under pressure, with the Philadelphia Semiconductor Index falling 1.4%. Software shares also declined. ServiceNow plunged 27%, its largest decline on record; Fortinet dropped 20%, its biggest drop since August 2025.
President Donald Trump's statement that the Iran issue would soon be resolved also weighed on stock indexes, amid concerns that the United States might resume strikes on Tehran.
At the close, the S&P 500 fell 0.3% to 7,720.39; the Dow Jones Industrial Average dropped 0.3% to 52,342.56; the Nasdaq Composite declined 1.4% to 26,184.72; the Nasdaq 100 fell 1.4% to 29,402.51; and the Russell 2000 rose 1% to 2,859.217.
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