Tech stocks tumble as AI spending fears hit Wall Street
The Nasdaq fell 2.6%, its worst day since June, after Meta raised its spending plans, while oil climbed above $114 a barrel and Asian markets followed lower.
US technology shares fell sharply on Thursday as investors questioned whether the huge sums companies are pouring into artificial intelligence will pay off. The Nasdaq Composite lost 2.6%, its steepest fall since early June, and the broader S&P 500 dropped 1.21%, its biggest one-day decline since late July.
Meta led the sell-off, sinking nearly 7% after it raised its capital spending forecast for this year to $135bn–$145bn, mostly for AI, while its profit fell short of expectations and its free cash flow turned negative. Tesla and Alphabet each lost 3.1% and Microsoft 2.2%; of the so-called Magnificent Seven, only Apple escaped substantial losses. Chipmakers Intel and AMD fell about 8% and Broadcom 4.3%.
Oil added to the gloom. Brent crude rose 4% on Thursday and kept climbing on Friday morning to above $114 a barrel, its highest level since May, as attacks linked to the US-Israel war with Iran threatened supplies.
Asian markets opened lower on Friday: Japan's Nikkei 225 fell more than 2% before recovering some ground, and South Korea's KOSPI dropped as much as 3.5%. Some analysts said the moves reflected nervous sentiment more than a change in company fundamentals.