US tech stocks tumble as investors fret over AI spending
The Nasdaq fell 2.6 percent as investors questioned Big Tech's enormous AI spending. Meta plunged nearly 7 percent; only Apple among the Magnificent 7 gained.
US tech stocks have tumbled sharply as investors grow nervous about the sustainability of the industry's enormous spending on artificial intelligence.
The Nasdaq Composite, dominated by tech firms riding the AI boom, fell 2.6 percent on Thursday. The broader S&P 500 slid 1.21 percent in its biggest single-day drop in weeks.
The pain was concentrated in the "Magnificent 7" giants that make up more than a third of the overall market. Meta plunged nearly 7 percent after lifting its projected capital spending for the year to $135bn. Amazon fell 4.6 percent and Nvidia dropped 4.4 percent, while Tesla and Alphabet both lost 3.1 percent and Microsoft declined 2.2 percent. Apple was the lone holdout, rising 1.2 percent.
Rising oil prices added to the pressure. Brent crude futures jumped 4 percent on Thursday and kept climbing on Friday, lifted by fallout from the US-Israel war on Iran that has pushed prices higher since February.
The sell-off rippled into Asia on Friday, with Japan's Nikkei 225 falling more than 2 percent in morning trading before recovering some ground, and Hong Kong's Hang Seng down about 0.5 percent.
One San Francisco analyst said investors had "just decided to be afraid this week," while acknowledging legitimate concerns about the AI trade. The debate over whether AI investment has become a bubble shows no sign of cooling: global AI spending is forecast to reach $2.7 trillion in 2026 and $3.6 trillion in 2027.
Source: Al Jazeera English — TrendWire reports stories in its own words; facts should be confirmed against the original source.