Tech Stocks Slide Again as AI Selloff Overshadows a Strong Earnings Season

Even a blowout earnings quarter from the world’s largest chipmaker wasn’t enough to lift tech stocks on Thursday. The Nasdaq dropped sharply for the second time this week, pulling the major indices deeper into the red.

The Day in Numbers

The Nasdaq fell 1.47%—roughly 387 points—to close at 25,881.95. The S&P 500 slipped 0.51% to 7,533.77, and the Dow lost 0.20% (about 105 points) to end at 52,552.97. All three major indices are now heading for weekly losses going into Friday.

Why it matters for you: If you hold a tech-heavy portfolio, Thursday added to what’s already been a rough week. The Nasdaq has given back a significant chunk of its recent gains, and broader market momentum has clearly stalled.

TSMC Had a Great Quarter — Investors Weren’t Impressed

Taiwan Semiconductor, the world’s largest chip foundry, reported strong second-quarter results: revenue of $40.2 billion, up 33.7% year over year, with earnings that beat expectations by 11.4%. Management even raised its full-year revenue guidance. Despite all that, shares fell 2.3% on the day.

Why? The company simultaneously announced an additional $100 billion investment in U.S. semiconductor fabrication plants — a massive capital commitment that gave investors pause.

Why it matters for you: A strong earnings report doesn’t automatically mean a stock will rise. When a company announces big spending alongside good results, markets sometimes react negatively, weighing future costs against current profits. It’s a reminder that stock price and business performance don’t always move in lockstep, especially in the short term.

Most of the “Magnificent 7” Joined the Slide

Alphabet fell 4.4% after the company disclosed a delay in the release of its Gemini 3.5 Pro AI model. Meta dropped 2.5%, NVIDIA fell 2.4%, and Amazon declined 2.0%. The broader AI trade, which drove much of the market’s gains in recent months, continued to face selling pressure across the board.

Why it matters for you: When the market’s biggest and most influential stocks fall together, they drag the major indices lower regardless of what other sectors are doing. If your portfolio leans heavily on AI-related names, Thursday’s session was a clear illustration of the concentration risk that comes with that.

Bright Spots: Healthcare Held Up Well

Not everything went down. Abbott Laboratories jumped 10.7% after reporting second-quarter revenue of $12.6 billion — up 13% year over year — and raising its full-year earnings guidance. UnitedHealth gained 1.2% after a solid quarter with $112 billion in revenue and a near-30% earnings beat. The company also lifted its adjusted earnings outlook for 2026.

More broadly, early Q2 results across the S&P 500 are tracking well above recent quarters — both on earnings growth and on the percentage of companies topping expectations.

Why it matters for you: Earnings season is off to a strong start outside of tech. This is a useful reminder that broad diversification across sectors can soften the blow on days when one part of the market is selling off hard.

Netflix After the Bell: A Test for Growth Stocks

After markets closed Thursday, Netflix reported second-quarter earnings that slightly beat expectations, but revenue of $12.6 billion came in just under the target. More significantly, the company issued softer-than-expected third-quarter revenue guidance. Shares dropped more than 8% in after-hours trading.

Why it matters for you: Netflix’s Friday open will be worth watching as a temperature check on how the market is feeling about growth-stock valuations. An 8% after-hours move can moderate significantly by the opening bell, but it also signals that investors aren’t forgiving even a small revenue miss right now.

What to Watch

• Netflix’s Friday open after an 8%+ after-hours drop
• More Q2 earnings reports — the majority of S&P 500 companies have yet to report
• How the three major indices close out the week after consecutive down sessions
• June retail sales came in at +0.2%, the smallest monthly gain in five months — consumer spending bears watching
• Initial jobless claims held steady at 208,000 last week, suggesting the labor market is still healthy

The Bottom Line

Thursday was another down day driven by AI and chip stock selling, even as the broader earnings season is delivering genuinely strong results. The gap between solid corporate performance and falling stock prices suggests investors may be focused on rising capital costs in AI infrastructure, macro uncertainty, and a natural pause after a long run-up. The weeks ahead — packed with earnings from across the S&P 500 — will show whether this is a temporary pullback or the start of something more lasting.

This article is for general information and education only. It is not investment advice, and nothing here is a recommendation to buy or sell any security. Markets carry risk — do your own research or consult a licensed advisor before investing. MoneyPilotAI may earn affiliate commissions from tools we mention; see our affiliate disclosure.