Thursday split the market clean in two. The Nasdaq Composite fell 2.6% to 26,008.86 — its worst day since June 5 — the S&P 500 dropped 1.21% to 7,663.43, and the Dow finished essentially flat, up 0.02% to 52,867.98. The bill for the AI buildout came due in a single session: Meta got punished for how it plans to pay for AI, chip names fell with it, and the money rotated into a streaming name that expanded margins and a soap-and-diaper giant that simply beat. Biotech supplied the day’s most violent lesson of all.

1. Meta Platforms (META) — record sales, punished for the AI bill

Meta reported third-quarter results after the close on Wednesday, October 21, and the core business has rarely looked stronger. Revenue rose 26% year over year to $64.6 billion, beating the roughly $63.3 billion consensus — Meta’s 17th straight quarter of beating sales estimates. Advertising revenue climbed 26% to $63.06 billion, driven by a 10% increase in ad impressions and a 14% rise in the average price per ad, and daily active people reached 3.64 billion, up 3%. Fourth-quarter revenue guidance of $73 billion to $76 billion also sat above the roughly $73.6 billion consensus midpoint.

So why did the stock fall 6.98% on Thursday to $648.85, its largest drop since July, and drag the whole Nasdaq down with it? Two reasons. First, the headline profit was messy: reported EPS was $3.83, weighed down by a one-time $9.89 billion legal charge tied to a teen mental-health settlement with state attorneys general. Excluding that charge, EPS would have been $7.40 and operating income $22.88 billion instead of the reported $12.99 billion. Second — and this is what really moved the market — the spending. Third-quarter capital expenditures hit $34.91 billion, full-year capex guidance was narrowed to $135 billion to $145 billion (the low end rose from $130 billion), total costs jumped 68%, and free cash flow turned negative at -$2.12 billion. Meta also announced a new non-voting Class C share structure to help it raise funds for the buildout. Investors heard “more stock to pay for AI,” and sold. Not everyone agreed with the verdict: Morgan Stanley raised its price target to $820 from $775 and kept an Overweight rating.

What to watch: Whether fourth-quarter revenue lands inside the $73 billion to $76 billion guide, whether free cash flow turns positive again, and what Meta says about 2027 capex when it gives a fuller outlook.

Caution flag: The advertising engine is superb, but it is now funding a capex program bigger than most companies’ entire revenue, plus a growing legal bill. Negative free cash flow and a possible share issuance are a real overhang until the spending peaks.

2. Spotify (SPOT) — subscribers beat, margins hit a record, stock jumps 11%

Spotify was Thursday’s clean winner. Shares closed at $583.66, up 11.19% on the day, after the streaming giant reported third-quarter results that morning. Premium subscribers reached 306 million, up 9% year over year — 6 million net additions in the quarter and 1 million ahead of Spotify’s own guidance. Monthly active users rose 11% to 788 million. Revenue grew 16% to €4.97 billion, just a hair under the €4.98 billion consensus, and premium ARPU climbed about 9% to €4.95.

The number investors cared about most was profitability. Gross margin hit a record 33.0%, up 136 basis points year over year, and operating income rose 15% to €672 million. The fourth-quarter guide sealed the rally: Spotify forecast operating income of €820 million, above the roughly €803 million to €813 million analysts expected, and 316 million premium subscribers, ahead of the roughly 314.7 million Wall Street had penciled in. Spotify has also repurchased $1.1 billion of its own shares so far this year. Analysts responded fast — price-target raises included Morgan Stanley to $700 and Evercore ISI to $750.

What to watch: The implied 10 million premium net additions in the fourth quarter, whether advertising revenue (up 10% to €482 million) keeps its turnaround going, and whether that record gross margin can push toward the guided 33.8% area.

Caution flag: Headline EPS of €2.48 missed the roughly €2.81 consensus and fell from €3.28 a year ago, free cash flow slipped 9% to €735 million, and operating expenses jumped 26%. After an 11% one-day jump, the stock still sits below its October 2025 high of $673.86 — the easy part of the re-rating may already be done.

3. Procter & Gamble (PG) — the defensive beat on a tech down day

While tech was getting sold, P&G quietly did what defensives are supposed to do. Reporting fiscal first-quarter results on Thursday, the consumer-goods giant posted net sales of $23.28 billion, up 4% year over year and ahead of the $22.80 billion consensus, and core EPS of $2.00, beating the $1.89 estimate. Organic sales also rose 4%, with volume contributing 2.4 points — growth came from selling more product, not just raising prices. All 10 product categories and all six regions grew, North American volume improved 3 points, and Greater China organic sales rose 8%. Shares gained about 5% on Thursday while the Nasdaq fell 2.6%.

Management kept the full-year story intact: organic sales growth guidance of 1% to 3% and core EPS of $6.89 to $7.11 were maintained, and all-in sales guidance was lifted to 2% to 4%, reflecting the $3.9 billion acquisition of supplement brand Thorne, which closed October 1. The friction is costs. Core gross margin fell 150 basis points, and P&G raised its expected fiscal-year after-tax cost headwind to about $1.4 billion on higher raw material, energy, and transportation costs — which is why 4% sales growth converted into only 1% core EPS growth.

What to watch: Management’s promised second-half acceleration after roughly 3% organic growth in the first half, whether volume growth holds up, and whether productivity savings start closing the margin gap.

Caution flag: This is a volume story fighting a cost story. If commodity and freight costs stay hot, P&G can keep beating on sales and still barely grow earnings — fine for a defensive holding pattern, less exciting if you need EPS momentum.

4. Moderna (MRNA) — good cancer data, brutal sell-the-news

Moderna supplied the week’s wildest move — in the wrong direction. On Thursday, detailed results for intismeran autogene, the personalized mRNA cancer vaccine Moderna is developing with Merck, leaked early on an oncology news site before the companies released them officially. The data themselves were strong: combined with Merck’s Keytruda, the vaccine reduced the risk of melanoma recurrence or death by 42% (hazard ratio 0.58) and the risk of distant metastasis or death by 38%, in 1,137 patients with resected stage IIB to IV melanoma. Two years out, 82.2% of vaccine patients were recurrence-free versus 70.0% on Keytruda alone, serious treatment-related side effects were similar (14.2% versus 13.4%), and there were no new safety signals. The full data will be presented at the ESMO congress in Madrid on Saturday, October 24, and the paper has been accepted by the New England Journal of Medicine.

The stock’s response: down more than 25% intraday — wiping out roughly $24 billion of market value — before closing down about 17.6% at $202.63. Context explains it. Moderna had risen more than 500% this year and nearly fourfold since mid-August, so the shares were priced for a spectacular result, and a merely strong one triggered a stampede for the exits. Analysts largely defended the data — UBS called it a strong dataset, and BMO attributed the fall to inflated expectations rather than the therapy itself — though at least one major bank still carries a Sell with a far lower target, which shows how divided the Street remains.

What to watch: Saturday’s full ESMO presentation, Monday’s trading reaction once investors have the complete dataset, the regulatory path from here, and overall-survival data, which are still immature at a median follow-up of 24.6 months.

Caution flag: This is the definition of a priced-for-perfection biotech. When a stock is up 500% into a binary data event, even good news can be a sell trigger — position size and expectations matter more than the headline result.

The bottom line: Thursday was a referendum on how growth gets paid for. Meta’s ads have never printed money faster, but the market now wants to see cash conversion, not just capex; Spotify showed AI-era spending and expanding margins can coexist; P&G reminded everyone why defensives earn their premium on red days; and Moderna showed that in a parabolic stock, good news is not enough. Next week is even bigger: the Fed decision plus Microsoft and Alphabet report on Wednesday, October 28, Amazon, Intel, and Eli Lilly follow on Thursday, October 29, and Apple and Palantir report on Monday, November 2.

Disclaimer: This post is for educational and informational purposes only and is not financial advice, a recommendation, or an offer to buy or sell any security. Investing involves risk, including possible loss of principal. Do your own research and consult a qualified financial professional before making investment decisions.