Tech Stocks Plunge as AI Spending Triggers Market Sell-Off
Major technology companies saw massive market value losses as investors grew skeptical of soaring artificial intelligence capital expenditures and lagging monetization.
A wave of third-quarter earnings reports triggered a significant sell-off in the Nasdaq 100, as investors reacted negatively to massive capital expenditures for artificial intelligence. Alphabet Inc. saw nearly $500 billion wiped off its market capitalization in a single day after missing expectations on sales, earnings per share, and its search and ad businesses. Amazon.com shares fell nearly 7% following reports of lackluster sales and negative free cash flow exceeding $40 billion, driven by $77 billion in property and equipment spending.
Meta Platforms Incorporated spent nearly $35 billion last quarter and raised its spending forecast to $135 billion, announcing plans to raise up to $97.5 billion in equity to sustain its AI ambitions. In contrast, Microsoft reported 48% sales growth in its Azure cloud business and held spending steadier than its rivals, though it announced it would raise $25 billion in debt to fund further expenditures. Other sector indicators suggested a slowdown, with Caterpillar reporting a 22% increase in inventory and ServiceNow providing weak revenue guidance despite strong AI contract value.
Hardware and semiconductor firms also faced volatility. Intel shares plunged nearly 25% due to weak PC processor demand and a disappointing fourth-quarter forecast. Tesla stock declined after the company reduced its 2026 capital expenditure forecast, signaling slower progress for its robotaxi and Optimus projects. Conversely, SK Hynix posted record sales and operating profit, securing AI-memory deals through 2028.
