US Tech Stocks Tumble as AI Spending Worries Spread Globally

The selloff followed several sessions when corporate earnings helped support US shares. On October 20, CNA reported that Wall Street gained as healthcare stocks rallied and oil prices fell.

That strength did not extend evenly across the market. According to Yahoo Finance, the Dow and S&P 500 rose while the Nasdaq slipped as investors awaited earnings from SpaceX and Netflix. Earnings were supporting some shares, but technology stocks were already showing a less settled picture.

On October 21, strong profit reports from SpaceX, Capital One Financial and other companies lifted US stocks, according to Top Stories. The S&P 500 gained 0.6 percent, bringing it within 0.8 percent of its record high.

The optimism faded. Bloomberg reported on October 21 that US equity futures fell as the technology rally weakened, trimming gains that had strengthened confidence in the AI trade.

By October 22, Tesla and Meta's third-quarter earnings had renewed concerns about high spending and technology development, according to Forbes. AI shares fell as investors reassessed those costs.

The concern extended to how infrastructure is financed. CBS reported that Wall Street analysts said investors were worried about the massive debt AI companies were relying on to fund data centers and chips.

The decline became one of the sharpest in months. The New York Times reported that the S&P 500 fell more than 1.4 percent, its biggest daily drop since July, while the Nasdaq lost nearly 2.5 percent, its largest one-day decline since June. Al Jazeera put the Nasdaq decline at 2.6 percent.

Oil added another source of pressure. The Sydney Morning Herald reported on October 22 that oil prices reached their highest levels since May amid worries about the war with Iran, while falling AI shares dragged markets lower worldwide.

The weakness carried into Asia on October 23. The Economic Times reported that MSCI's regional equities benchmark slipped 0.3 percent for a second consecutive decline, leaving it near levels last seen in July. Seeking Alpha described Asian markets as mixed, rather than uniformly lower.

The selling was not equally broad across industries. The Guardian reported that non-AI stocks still showed strength even as data center and chip costs weighed on AI shares. Bloomberg also reported that the technology rout and escalating Middle East hostilities were pushing investors toward bonds.

One concrete financing test is taking shape at SK Hyper. Bloomberg Technology reported on October 23 that Chung Suk-geun, CEO of SK Group's Data Center arm, SK Hyper, said the firm was in talks with big technology companies and financial investors to secure funding for an envisioned $350 billion infrastructure buildout.

Those talks remain pending. They put a specific funding question alongside the broader market concern described by CBS: how companies will finance their data centers and chips as investors become more anxious about debt.