Nasdaq Plunges 2% as AI Spending Doubts and Oil Surge Trigger Broad Selloff

What’s happening

The Nasdaq fell more than 2% on Thursday—its worst day since June—as Meta Platforms and Tesla led declines among mega-cap names. Oil prices soared above $111 per barrel on Iran conflict concerns, while investors reassessed the massive debt loads AI companies are carrying to finance data center and chip buildouts.

Market impact

The selloff reflects a critical inflection point: the market is now pricing in whether AI's capital intensity can actually generate returns. Treasury yields tumbled below 5% as investors fled to safety, signaling real concern about credit stress in the AI infrastructure space. Expect volatility to persist until earnings clarify which AI players have viable unit economics.

Broader implications

This marks the end of the "build at any cost" phase. The AI boom is entering a reckoning period where profitability and cash flow matter again. Geopolitical risk—Iran tensions pushing oil higher—is now a secondary amplifier of equity weakness.