Nasdaq 100 futures were down about 1.9% before dawn Thursday. Lam slid about 8% in premarket trading, Applied Materials and KLA about 4% to 5%, and Asian chipmakers fell sharply, a day after the Nasdaq closed up 1.05%.
On Wednesday, the AI trade had its best day in a while. By Thursday morning, every link in the chain was lower.
Futures on the Nasdaq 100 fell about 1.9% by 4:54 a.m. Eastern, and S&P 500 futures about 1.1%, after a run of evening results from Meta Platforms, Tesla, IBM and Lam Research. In early premarket indications, Lam was down about 8.1%, Applied Materials 4.9%, KLA 4.1%, Micron 3.4%, Oracle 2.6%, SpaceX 2.7% and Nvidia 2.4%. The selloff began in Asia: Tokyo Electron fell more than 6%, SK Hynix about 5.7%, Samsung Electronics about 4.2% and Alibaba about 6.5%. The Kospi lost 3.5% and China's CSI 300 index ended close to 20% below its peak.
The puzzle in the numbers
The striking part is that the evening's news, read one company at a time, was not bad for chip suppliers. Meta raised the low end of its 2026 capital spending range to $135 billion, from $130 billion, keeping the top at $145 billion. Lam Research reported record revenue of $8.22 billion, up 54% from a year earlier, and guided above analysts' average for the December quarter. IBM beat on revenue and raised its free cash flow outlook.
Two other disclosures pointed the other way. Tesla cut its 2026 capital spending forecast to about $20 billion from more than $25 billion. And on IBM's call, Chief Executive Arvind Krishna said clients were "getting worried if some of the AI spending [is] completely out of control with no real return," according to accounts of the call. IBM shares had risen as much as 7.3% after hours before turning lower.
Meta's own report captured both sides of the debate in one quarter: revenue up 26%, but capital spending that exceeded operating cash flow and pushed free cash flow negative.
Two readings
One reading is that investors are re-rating AI capital spending from a growth driver into a financing and return risk. Spending is still rising at the biggest buyers, but the cash to fund it is getting tighter, and a large customer voicing doubts about returns is the kind of signal that moves supplier stocks before it shows up in orders.
The other reading is that this is profit-taking after a strong run. Wednesday's U.S. close was positive, with the Nasdaq Composite up 1.05% to 26,702.86, and the evening's results mostly beat estimates. Thin premarket trading can exaggerate moves that the regular session reverses.
Oil also complicates the picture. Brent rose about 3% overnight as attacks in Saudi Arabia added a separate source of risk aversion in the same hours.
What to watch
Whether the semiconductor declines hold after the 9:30 a.m. open; Thursday's earnings from other large industrial and consumer companies for read-across on spending; and Meta's fourth-quarter spending pace, which its full-year range implies will be roughly $49 billion to $59 billion.