US technology stocks experienced significant losses as concerns over artificial intelligence spending and disappointing earnings triggered a widespread market sell-off. The Nasdaq lost nearly $1 trillion in market value over the past week, with losses over the last month nearing $2 trillion. This downturn reflects growing investor skepticism about the profitability of major tech companies’ investments in AI infrastructure.
The S&P 500 fell by more than 1%, threatening to reverse its October gains, while the Nasdaq Composite dropped over 3%. The Dow Jones Industrial Average also faced declines, though to a lesser extent. The Nasdaq 100 has decreased by over 5.8% in October, as questions arise about whether tech giants can achieve adequate returns on their substantial AI spending.
Intel’s stock took a steep dive, plummeting nearly 30% following a weaker-than-expected profit forecast for the final quarter of the year, despite surpassing analysts’ earnings expectations for the current quarter. Likewise, Amazon shares fell by 1.8% after reporting lower-than-anticipated summer profits and higher-than-expected spending. Alphabet’s shares dropped more than 12% in the previous session, erasing approximately $500 billion from its market value after disclosing increased cash spending on AI.
Major technology firms, including Meta, Alphabet, and Amazon, continue to increase their investment forecasts to expand AI infrastructure and data center capacity. However, investors are increasingly worried about whether these investments will yield adequate returns and productivity improvements.
Nvidia shares also fell by 3.1%, adding to the pressure on the S&P 500. Broader concerns persist that high interest rates could hinder data center expansion and weaken demand for AI-related companies.
This market downturn underscores the uncertainty surrounding the profitability of AI investments, despite robust expectations for corporate earnings growth across the US economy.