On a Thursday in late October, the American technology sector, whose fortunes have been bound to the promise of artificial intelligence, shed value in a single session as investors asked a question the boom had long deferred: can the sums being poured into AI be sustained? The tremor ran from Wall Street through Asian markets the following morning, carried by the same unease that has echoed through past speculative eras. Some observers hear in it the murmur of a bubble, while others see only a mood passing through the market, and the answer will be written in the months ahead.
US Tech Stocks Slide as Investors Question the Cost of the AI Boom
Investors have just decided to be afraid this week.
Mark
Why did one day's drop get so much attention? The Nasdaq has had worse days this year.
Mimi
It has, the 4.2 percent fall on June 5 was bigger. But this one hit nearly every Magnificent 7 stock at once, and that group is over a third of the whole market, so it shows up everywhere.
Mark
Meta seems to be the sharpest example.
Mimi
Yes. It fell nearly 7 percent after lifting its 2026 spending forecast to $135bn-$145bn while its profit missed expectations. Bigger spending and weaker earnings in the same report is a hard combination.
Luke
Careful, though. The reporting links Meta's drop to that report, but it doesn't tell us why Intel and AMD fell about 8 percent each. The cause there isn't established.
Mark
And the analyst said nothing had really changed.
Mimi
Jay Goldberg of Seaport Research Partners said it was sentiment, a wall of worry, not fundamentals. He still allowed that the AI concerns are legitimate.
Luke
That's one analyst's read, and he admits people give him different causes. Nobody has shown what actually triggered the selling.
Mark
What about oil?
Mimi
Brent rose 4 percent Thursday and went above $114.20 on Friday, the highest since May. It's tied to the fallout from the US-Israel war on Iran.
Luke
The article lists it as adding to the mood. It doesn't quantify how much it contributed to the tech decline.
Mark
So is this a bubble?
Luke
That's unresolved. Analysts are split, and Gartner's $2.7 trillion and $3.6 trillion figures are forecasts, not outcomes.
Le Pouls
- The Nasdaq fell 2.6 percent, its worst day since June, as the giants of the Magnificent 7 sold off together.
- Meta slid nearly 7 percent after lifting its capital spending forecast to between $135bn and $145bn, and its profit disappointed.
- Investors are wrestling with whether AI spending is a bubble, with analysts sharply divided on the answer.
- Brent crude climbed above $114.20 a barrel, adding war-driven pressure to tech valuations that are already wobbling, and Asian markets opened lower in response.
On a Thursday in late October, the American technology sector, whose fortunes have been bound to the promise of artificial intelligence, shed value in a single session as investors asked a question the boom had long deferred: can the sums being poured into AI be sustained? The tremor ran from Wall Street through Asian markets the following morning, carried by the same unease that has echoed through past speculative eras. Some observers hear in it the murmur of a bubble, while others see only a mood passing through the market, and the answer will be written in the months ahead.
On Thursday the Nasdaq Composite closed 2.6 percent lower, its sharpest fall since June 5, and the selling centred on the technology giants driving the artificial intelligence boom. Nearly every member of the Magnificent 7 lost ground, with only Apple rising. Meta fell almost 7 percent after raising its capital spending plans for the year to between $135bn and $145bn, and its profit came in below expectations. Amazon, Nvidia, Tesla, Alphabet and Microsoft all declined, and chipmakers Intel and AMD each dropped about 8 percent.
The unease reached beyond the tech giants. Oil prices, which have climbed since February amid the fallout from the US-Israel war on Iran, pushed Brent crude above $114.20 a barrel, its highest level since May. Asian markets followed Wall Street down on Friday, with South Korea's KOSPI falling as much as 3.5 percent.
Jay Goldberg of Seaport Research Partners argued that the moves reflected sentiment rather than fundamentals. Nothing had fundamentally changed, he said, and investors had simply decided to be afraid this week. Yet the debate underneath is real: some analysts see datacentre and chip spending as unsustainable and recall the dot-com crash, while others believe AI will transform society enough to justify the vast outlays. With oil still rising and that question unresolved, the pressure on tech valuations may persist in the sessions ahead.
On Thursday, the Nasdaq Composite closed 2.6 percent lower, its worst day since June 5, when the index lost 4.2 percent. The index is dominated by the technology companies tied to the artificial intelligence boom, and the selling was driven by one question: whether the enormous sums those companies are pouring into AI can be sustained.
The broader S&P 500 slid 1.21 percent, its biggest drop since a 1.52 percent decline on July 29. The damage was concentrated in the so-called Magnificent 7, the group of giants that together make up more than one-third of the overall market. Apart from Apple, which rose 1.2 percent, every one of them took substantial losses.
Meta fell nearly 7 percent. In its latest earnings report the Facebook parent raised its projected capital spending for this year to between $135bn and $145bn, while its net profit came in below expectations. Amazon dropped 4.6 percent and Nvidia 4.4 percent. Tesla and Alphabet each fell 3.1 percent, and Microsoft declined 2.2 percent.
The sell-off spread beyond those names. Intel and Advanced Micro Devices each lost about 8 percent, and Broadcom slid 4.3 percent. After the day's losses, the Nasdaq sits roughly 5.8 percent below its all-time high, set on October 6.
Oil added to the unease. Prices have been rising since February because of the fallout from the US-Israel war on Iran. Brent crude futures gained 4 percent on Thursday and kept climbing on Friday morning, taking the international benchmark above $114.20 a barrel, its highest level since May.
Asian markets opened lower on Friday, following Wall Street. Japan's Nikkei 225 fell more than 2 percent in morning trading before recovering some ground. South Korea's KOSPI dropped as much as 3.5 percent, and Hong Kong's Hang Seng Index fell about 0.5 percent.
Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, told Al Jazeera that the swings looked more like sentiment than fundamentals. "In short, nothing has changed," he said, adding that investors had simply decided to be afraid this week. Everyone he speaks to, he said, points to a different cause, which he called a giant wall of worry. He acknowledged there are legitimate concerns about the AI trade, but said a move of this size owed far more to investor mood than to any tangible reason.
The backdrop is a fierce debate over whether a bubble is forming, similar to the one that preceded the 2000 dot-com crash. Some Wall Street analysts see current spending on datacentres and graphics processing units as unsustainable. Others argue AI will transform society enough to justify the eye-watering sums. Gartner forecasts global AI investment of $2.7 trillion in 2026 and $3.6 trillion in 2027.
With oil still climbing and that argument unresolved, pressure on tech valuations could continue in the coming sessions.
Citations marquantes
In short, nothing has changed. Investors have just decided to be afraid this week.— Jay Goldberg, senior analyst, Seaport Research Partners
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