Technology stocks on Wall Street experienced a significant sell-off Wednesday, led by steep declines in companies heavily invested in artificial intelligence. The Nasdaq Composite dropped 2.6 percent to 26,008.86, marking its largest daily loss since early June. The broader S&P 500 index fell 1.2 percent, closing at 7,663.43, while the Dow Jones Industrial Average managed a slight gain, finishing up by less than 0.1 percent at 35,867.98.

The retreat was sparked by comments from Meta Platforms, which raised concerns among investors about the escalating costs associated with AI research and development. Meta’s cautionary remarks rekindled fears about an intensifying spending race within the technology sector, prompting declines across several major tech companies, including Nvidia and SpaceX.

Market participants appeared to reassess the profitability outlook for AI-focused firms amid increased investment expenditures and potential margin pressures. The overnight sell-off reflected growing unease that the rapid expansion in AI spending could weigh on near-term earnings across the sector.

Despite the sharp drops in the tech-heavy Nasdaq and the S&P 500, the Dow Jones was buoyed by gains in more traditional industrial and financial stocks, which helped offset some of the broader market losses. Analysts noted that the mixed performance underscored the sector-specific nature of the sell-off rather than a widespread market downturn.

The pullback follows a broader trend of heightened volatility in technology shares this year, as investors weigh both the opportunities presented by advancements in AI and the risks associated with increased capital deployment. The evolving dynamic suggests ongoing market sensitivity to updates from major tech companies regarding their AI strategies and spending plans.