US tech stocks fall sharply as investors question AI spending
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The Nasdaq dropped 2.6% on Thursday, its biggest one-day fall since early June, led by Meta, Intel and AMD, while oil prices climbed.
Technology shares fell sharply on Wall Street on Thursday, 22 October, as investors grew uneasy about the scale of spending on artificial intelligence, according to Al Jazeera.
The tech-heavy Nasdaq Composite lost 2.6%, its steepest daily drop since 5 June, while the broader S&P 500 slipped 1.2%. The Nasdaq now sits about 5.8% below the record high it set on 6 October.
Apart from Apple, which rose 1.2%, the "Magnificent 7" group of giant tech firms all fell heavily. Meta dropped almost 7% after raising its 2026 capital spending forecast to between $135bn and $145bn and reporting profit below expectations. Amazon fell 4.6%, Nvidia 4.4%, and Tesla and Alphabet 3.1% each. Chipmakers Intel and AMD both lost around 8%.
Rising oil prices added to the pressure. Al Jazeera notes that Brent crude has climbed since February after the US-Israel war on Iran, and futures passed $114.20 a barrel on Friday morning, their highest level since May.
Analyst Jay Goldberg of Seaport Research Partners said the moves reflected sentiment more than fundamentals: "Investors have just decided to be afraid this week." Some analysts regard spending on data centres and chips as unsustainable and compare it to the dot-com bubble, while others argue AI will justify the investment. Research firm Gartner forecasts global AI investment of $2.7 trillion this year.
Asian markets were mixed on Friday: Japan's Nikkei closed 0.3% lower, South Korea's KOSPI finished 0.3% higher after an early drop, and Hong Kong's Hang Seng rose 0.7%.