Nasdaq falls sharply as investors worry about AI spending

Summarised from 2 outlets · Updated 23 Oct, 04:44 · Archive

US tech stocks fell sharply on Thursday amid concerns over whether massive AI investments will be profitable.

US tech stocks fell sharply on Thursday as investors reassessed massive spending by artificial intelligence companies. The Nasdaq Composite dropped between 2.6 and 2.8 per cent to close around 26,009, whilst the S&P 500 fell 1.2 per cent. The Dow Jones Industrial Average was largely flat. High oil prices contributed to the broader market downturn.

Major technology companies saw substantial losses. Meta fell nearly 7 per cent after raising its projected capital spending for the year to between $135bn and $145bn in its latest earnings report. Amazon fell 4.6 per cent, Nvidia dropped 4.4 per cent, and both Tesla and Alphabet declined 3.1 per cent. Microsoft, Intel and Advanced Micro Devices also posted significant declines.

Wall Street analysts attribute investor concerns to doubt about whether AI companies will generate sufficient profits to justify their capital spending. According to Adam Crisafulli, head of Vital Knowledge, AI companies are dependent on raising funds through equity and debt markets to finance infrastructure buildout, but credit conditions are tightening. The Brookings Institution estimates that developing AI infrastructure between 2025 and 2032 will cost more than $10 trillion, representing the largest sustained investment in US history.

The sell-off extended to Asian markets, with Japan's Nikkei 225 falling more than 2 per cent and South Korea's KOSPI dropping as much as 3.5 per cent.

How it is being reported

• US tech stocks tumble as investors fret over AI spendingTech-heavy Nasdaq falls 2.6 percent as debate rages over whether AI is a bubble.Al Jazeera · 23 Oct, 04:13
• Nasdaq dives 750 points as investors reassess AI spendingInvestors are fretting over the massive debt AI companies are relying on to finance data center and chip spending, Wall Street analysts say.CBS News · 22 Oct, 21:12

In this story: Nasdaq · S&P 500 · Meta · Nvidia · Amazon · Microsoft · Wall Street · United States

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