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US Tech Stocks Plunge Amid AI Spending Worries

2:50 PM ETConfirmed

Business Desk

In Short: US tech stocks fell sharply on Thursday as concerns over massive AI investments intensified.

US tech stocks saw a sharp decline on Thursday, with the Nasdaq Composite falling 2.6 percent, its steepest drop since June 5. The sell-off extended to major tech players like Meta, Amazon, and Nvidia.

Micron Technology's shares retreated by as much as 5% in early trading, following a week of significant declines. Meta dropped nearly 7 percent after raising its projected capital spending to $135bn to $145bn, despite missing profit expectations.

The debate over whether the current tech boom is a bubble similar to the dot-com crash of 2000 is intensifying. Tech-heavy markets in Taiwan, South Korea, and Japan have also come under pressure amid investor scrutiny of global tech companies' earnings and AI spending.

Tech companies are pouring billions into AI infrastructure, with Amazon and other major players raising or reaffirming their capital spending plans. However, this spending has led to cash outflows and slower growth in core businesses.

Market analyst Adam Crisafulli noted that this has been one of the worst tech earnings seasons in memory, with underwhelming results from prominent companies. Technical strategist Jason Hunter highlighted deteriorating market internals and a lack of conviction in tech/AI leadership.

Despite the US lead in computing power and spending, China is producing more AI research and training more technical talent, adding to the pressure on US tech companies.

Institutional investors and large funds often sell off stocks near the end of the third quarter to lock in gains or adjust asset allocations, contributing to the current market jitters.

While most mega-cap tech companies are spending heavily on AI infrastructure, Apple is focusing on product development rather than AI investments, potentially offering a safer haven for investors.

The market's behavior mirrors the pattern seen before the 1999 tech crash, with a growing divergence between AI hardware/chip makers and heavy AI capital expenditure spenders.

Investors are paying closer attention to cash flow as technology spending accelerates, with concerns rising over the sustainability of companies' enormous capital investments in AI.

What this adds

What's confirmed

• The company reported a sharp cash outflow in the third quarter and signaled another increase in capital expenditure next year.

What's still developing

• Spending at that pace is a bet on sustained AI-driven memory demand.
• The sell-off extended to other major tech players, including Intel and Advanced Micro Devices, both of which fell about 8 percent, and Broadcom, which slid 4.3 percent.
• Tech stocks tumbled for the second day in a row as concerns rise over the hundreds of billions of dollars firms are investing in artificial intelligence (AI).
• Brent got to nearly $106 in the morning before President Donald Trump sent its price veering after saying "productive discussions" are happening with Iran and that the U.S. military would not attack it before the upcoming U.S. elections in November.
• In July, the semiconductor sector of the U.S. stock market began to underperform; chip stocks fell precipitously, down 20% and more.
• While most mega-cap tech companies are spending wildly on AI infrastructure, Apple is largely sitting it out and instead focusing on what it historically does best, creating products that get consumers buzzing, such as its new foldable iPhone Duo.
• Varma fell just one run short of a well-deserved century after spinner Md Kounain Quraishi took a sharp return catch, ending South Zone’s first innings at 336 runs on Day 4.
• In back-to-back earnings disclosures, the three companies raised or reaffirmed capital spending plans that push combined 2026 capital expenditure across the four largest hyperscalers, including Amazon, toward $725 billion, according to a widely circulated Stocktwits report and corroborating coverage from Yahoo Finance and TMT Finance.
• Noem put billions in DHS spending under her office, giving Lewandowski enormous influence over who got contracts.
• Meta Platforms’ results beat analyst expectations, but its stock slid 7.5% as the Facebook parent posted its first cash outflow in more than a decade due to its AI-related expenditures and announced plans to issue non-voting shares in a two-for-one split to raise capital to spend on the nascent technology.
• Even though PIP spending and claimant numbers were rising sharply under the last Conservative government, the opposition has used figures showing increasing numbers of PIP claimants as a key point of attack against Labour in recent months.
• Five dividend-paying stocks across defensive sectors may offer shelter if the autumn sell-off materializes.

Sources

• 24/7 Wall St.link
• Al Jazeeralink
• BBClink
• Business Standardlink
• CBS Newslink
• Honolulu Star-Advertiserlink
• NBC Newslink
• Opensecretslink
• The Arkansas Democrat-Gazettelink
• Cnbctv18link
• Fox Businesslink
• Washingtonexaminerlink
• Businesstimeslink
• Cricketaddictorlink
• Tech-Insiderlink
• Wearemoviegeekslink
• Reuters — video link