Nasdaq lags on angst over AI spending ahead of earnings reports

The tech-heavy Nasdaq fell on Friday as investors sold chip stocks on worries about massive spending on artificial intelligence ahead of the next batch of megacap earnings reports, while falling oil prices provided Wall Street with some support even as Middle East hostilities continued.

The S&P 500 ended close to flat but its biggest weight came from the S&P 500 technology index .SPLRCT, which underperformed the broader market as chip stocks fell.

While investors wait for results from megacaps Microsoft MSFT.O, Amazon.com AMZN.O, Meta META.O and Apple Inc AAPL.O, their enthusiasm was weakened by Alphabet's GOOGL.O announcement, late on Wednesday, of a plan to hike capital spending even as it burns cash.

After piling into technology stocks in recent years, on the promise of growth from AI, investors have become worried about the need for ever-increasing capital outlays for AI, according to Peter Andersen, CEO of Andersen Capital Management.