New York, Feb 5, 2026, 21:38 EST
- Nasdaq ended at its lowest point since November, dragged down by another drop in big tech and software stocks.
- Alphabet indicated capital spending could hit $185 billion by 2026, stirring investor doubts about the returns on its AI investments.
- Bitcoin plunged roughly 13%-14%, while silver slid amid a broad sell-off in risk assets across markets.
Wall Street’s selloff intensified Thursday, pulling the Nasdaq down to its lowest finish since November. Investors unloaded major tech and software stocks, while bitcoin fell below $63,000.
The decline is significant now as the market’s biggest wager—rapid AI adoption driving profit growth—is running up against valuation limits. Alphabet outlined yet another boost in spending, and investors are growing impatient with bets that pay off only in the distant future.
Traders noted a change in their fears: it’s no longer just about AI creating new revenue streams. Now, many worry it could slash demand for traditional software, squeezing margins throughout the sector as cutting-edge tools gain ground.
The S&P 500 slid 1.23% to 6,798.40, while the Nasdaq dropped 1.59% to 22,540.59. The Dow fell 1.20%, closing at 48,908.72. Microsoft shares declined 5%, Palantir slipped 6.8%, and Oracle lost 7%. Amazon fell 4.4% during regular hours and then plunged another 10% after the bell.
Alphabet shares slipped after the Google parent revealed plans to spend up to $185 billion in 2026, driving the estimated AI spending for its top rivals past $500 billion this year, Reuters reported. “We’re seeing this volatility about whether this investment will translate, ultimately, into results,” said Tom Hainlin, an investment strategist at U.S. Bank Wealth Management.
Software stocks took the brunt of the losses. The S&P 500 software and services index dropped 4.6%, wiping out roughly $1 trillion in market value since Jan. 28 in what Reuters has called “software-mageddon.” “At this stage, I’d describe it as a sell-everything mood,” said Dave Harrison Smith, chief investment officer at Bailard. https://www.reuters.com/business/us-software-stocks-stabilize-after-bruising-selloff-ai-disruption-fears-2026-02-05/
Some desks pointed to technical signals, highlighting that the group is trading well below its 200-day moving average—a key trend indicator for oversold conditions—but few were ready to call a bottom. “Calling the bottom during a crash in sentiment like this is very, very challenging,” Smith said. At the same time, Alpine Macro’s Nick Giorgi cautioned that steady dip-buying has yet to materialize.
The latest sell-off hit crypto and metals hard. Bitcoin dropped about 14% in the last day, slipping below $63,000. Silver also took a hit, down roughly 14%, while gold fell 2.6%, CNN reported. “When you have trades that get very extended in a very short period of time, they have a nasty way of unwinding themselves,” said Steve Sosnick, chief strategist at Interactive Brokers, in an interview with CNN. https://keyt.com/news/money-and-business/cnn-business-consumer/2026/02/05/stocks-tumble-on-weak-labor-market-data-and-ai-concerns/
Bloomberg called it a wider pullback from risk, with investors pulling away from favored bets “from tech stocks to gold to cryptocurrencies,” and no clear catalyst behind the moves. https://www.bloomberg.com/news/articles/2026-02-05/wall-street-s-favorite-trades-collapse-as-market-selloff-deepens
Positioning is showing cracks, too. Reuters pointed to climbing short interest in mid- to large-cap software stocks and a drop in hedge-fund exposure. Worries are also mounting around private credit and asset managers linked to the software sector.
The road ahead looks complicated. Should earnings and AI investment plans continue to underwhelm, forced selling might ramp up, dragging credit-sensitive areas down further. But if results begin to deliver clearer gains — or volatility eases — battered tech and software names could bounce back fast, especially as some indicators show they’re deeply oversold.
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