Recently, Wall Street experienced a sharp tech-led sell-off, with the Nasdaq Composite plunging 2.58% in its steepest single-session decline since June, as renewed investor anxiety over artificial intelligence infrastructure costs triggered a broad market retreat.
Market sentiment soured following heavy capital expenditure updates and earnings reports from major tech players, whose aggressive data center build-outs and multi-billion-dollar AI commitments sparked fresh debates over return on investment.
While major developers continue to emphasize long-term strategic positioning, shareholders increasingly focused on the immediate strain massive capital outlays place on corporate balance sheets, free cash flow, and debt loads.
Major firms affected:
The Nasdaq Composite, which is dominated by tech firms linked to the AI boom, fell 2.6 percent on Thursday, its steepest fall since the index tumbled 4.2 percent on June 5.
The broader S&P 500 slid 1.2 percent, the benchmark’s biggest drop since a 1.5 percent decline on July 29.
Apart from Apple, each of the “Magnificent 7”, which make up more than one-third of the overall market, saw substantial losses.
Meta dropped nearly 7 percent after it raised its projected capital spending for this year to $135bn to $145bn in its latest earnings report, even as the Facebook parent company’s net profit fell short of expectations.
Amazon fell 4.6 percent, while Nvidia dropped 4.4 percent.
Tesla and Alphabet both fell 3.1 percent, while Microsoft declined 2.2 percent while Apple rose 1.2 percent.
The sell-off extended to other major tech players, including Intel and Advanced Micro Devices, both of which fell about 8 percent, and Broadcom, which slid 4.3 percent.
After the losses, the Nasdaq is about 5.8 percent off its all-time high, reached on October 6.
Rising oil prices since February, due to the fallout of the US-Israel war on Iran, added to the downbeat mood.
Brent crude futures rose 4 percent on Thursday and continued to climb on Friday morning, taking the international benchmark above $114.20 a barrel, its highest since May.
Broader impact:
US tech companies’ huge investments in AI have stoked intense debate about whether a market bubble is forming similar to the one that preceded the 2000 dot-com crash.
While some Wall Street analysts view current levels of investment in data centres and graphics processing units as unsustainable, others argue that AI will revolutionize society to a degree that justifies the eye-watering sums involved.
Global AI investment is forecast to reach $2.7 trillion in 2026 and $3.6 trillion in 2027, according to technology insights company Gartner.
