Technology stocks face Wall Street sell-off over AI spending concerns
Investors are worried that massive investments in artificial intelligence infrastructure may not generate profits quickly enough to justify high valuations.
Technology stocks on Wall Street faced a sharp sell-off this week as investors grew concerned that heavy spending on artificial intelligence infrastructure might not lead to rapid profit growth. The Nasdaq 100 Index saw an October decline of 6.7 per cent, its worst monthly performance since March 2025.
Alphabet Inc. shares plunged 13 per cent on Thursday following an earnings announcement that showed disappointing sales growth in its core search business. The company also reported its second consecutive quarter of negative free cash flow, after spending more than $50 billion on infrastructure and capital investments during the latest quarter.
Amazon.com Inc. shares declined 5.6 per cent over Thursday and Friday, marking its worst two-session performance since July. The company reported higher negative free cash flow than expected due to increased capital expenditure and slower e-commerce growth.
Meta Platforms Inc. shares have fallen approximately 12 per cent since its October 21 results revealed a substantial increase in capital expenditure plans. Meanwhile, Intel Corp. shares plunged nearly 29 per cent on Friday after its profit forecast fell short of analyst expectations.
The sell-off affected major US indices, with the S&P 500 declining 0.6 per cent and the Dow Jones Industrial Average falling 0.9 per cent for the week. China's STAR 50 Index also declined 24 per cent over the past month, according to Groww.