Traders woke up Thursday to a market that looked less like a steady climb and more like a test of nerves. A fresh wave of AI anxiety, disappointing corporate news and softer labor-market signals combined to push major indexes lower, knock tech names around and spark violent moves in crypto and precious metals.
By the close: the Dow fell about 1.2%, the S&P 500 dropped roughly 1.2% and the Nasdaq slipped about 1.6% — with technology and software names bearing the brunt of the pain. Futures pointed lower after hours as investors digested Amazon’s report and a batch of mixed corporate results.
The headline moves
- Amazon shares plunged after-hours (double-digit declines reported) after the company slightly missed EPS expectations and warned investors to expect roughly $200 billion in capital spending this year. That capex number — massive even for Amazon — amplified questions about near-term margins and returns.
- Software stocks, already under pressure, tumbled again: the iShares Expanded Tech-Software ETF slumped and is on track for its worst weekly stretch in years. Qualcomm and several other chip and software names posted sharp post-earnings drops.
- Bitcoin plunged into the mid-to-low $60,000s (some data points showed intraday falls into the low $60k or even briefly below $61k), wiping out much of the optimism that had supported crypto prices late last year.
- Silver erased a recent two-day rebound, falling roughly in the mid-teens percentage range from peaks — an extraordinary swing that underlines how thin liquidity and speculative positioning can magnify moves.
These moves echoed across related products. The Roundhill Magnificent Seven ETF hit its lowest close since October, while risk gauges like the VIX jumped as traders rushed to hedge.
Why AI is suddenly the market’s bogeyman
Investors have spent months tracking AI-related spending from the big cloud and chip providers. Now the conversation has shifted: instead of only cheering the winners who build the infrastructure, markets are wrestling with how AI tools could upend the business models of incumbent software vendors.
The near-term catalyst: new releases from AI startups and incumbents that suggest productivity tools could automate work traditionally done by coders and other software professionals. “The near-term trigger was the Anthropic plug in release,” one strategist observed, while analysts at Jefferies noted the market’s rush to re-price software’s competitive landscape.
Alphabet’s higher capex plan and deeper Gemini work — which is increasingly woven into Google products and workflows — have investors balancing long-run opportunity against short-run disruption. Alphabet’s push into data‑center spending and features such as AI integrations has implications across the hardware and services supply chain; those developments connect to broader stories about Google’s AI ambitions and productization, including how Gemini is being embedded into productivity tools like Gmail and Drive. See more on Gemini’s expanding reach in product search and grounding features in Gemini Deep Research plugs into Gmail, Drive and Chat.
At the same time, big cloud players are racing to build differentiated models and tooling — moves that have benefits for some vendors and existential threat to others. That dynamic helps explain why capital-intensive names (and suppliers to AI datacenters) can rally even as traditional software companies stumble. For a sense of how Google and others are evolving AI workflows, check recent product updates in Google’s AI Mode agentic booking and new generative-image offerings such as Microsoft’s MAI-Image-1.
The economic backdrop made sellers more impatient
The market’s tech meltdown arrived on the heels of softer labor-market signals that gave traders little confidence the economy could cushion the blow. Job openings slid to their lowest level since 2020 in the JOLTS report; weekly jobless claims rose more than expected; and private trackers showed January’s layoff announcements were the heaviest for that month since 2009.
When growth expectations wobble, investors that had been willing to look past near-term profit pressure for long-term AI gains become less tolerant. That’s especially true for highly valued software firms whose profit pools are easiest to question under an AI disruption narrative.
A feedback loop: risk-off across assets
What began as sector rotation and profit‑taking became a broader risk-off stampede. Crypto holders faced steep markdowns; silver and gold experienced rapid reversals after a speculative run; and even cyclical names were dragged lower as the S&P’s breadth deteriorated.
Traders described this as a liquidity-stretched environment where outsized moves in a handful of assets feed one another. Steve Sosnick, a market strategist, likened some of the declines to the unwinding of aggressive, extended trades — spectacular and painful, but also a feature of crowded positioning.
What investors are watching now
Earnings season isn’t done: AWS results and further commentary from Amazon’s management are being parsed for cloud trends; other companies’ capex plans will be examined for signs of the data-center buildout’s true pace. Meanwhile, the delayed January jobs report — now due next week — will likely be a focal point for markets trying to decide whether labor softness is a temporary wobble or something more durable.
Beyond the numbers, market participants will be listening for clarity on how AI investments translate into revenue and margins, and for any signs that demand for cloud capacity is weakening. If cloud growth slows materially, it could echo through chipmakers, cloud suppliers and the many service providers that feed software companies’ growth.
Thursday’s session was a reminder that rapid technological change and macro fragility can collide quickly — and that when sentiment flips, it can reach well beyond the usual suspects.