Tech Stocks Slump as AI Costs and Middle East Tensions Rise
Wall Street indexes declined as investors questioned AI returns following earnings reports from Meta and Tesla, while Houthi attacks in Saudi Arabia drove oil prices above $110.
Nasdaq futures and major Wall Street indexes declined on October 22, 2026, as investors grew skeptical of the return on investment for artificial intelligence. Despite reporting better-than-expected third-quarter results, Tesla, Inc. saw its shares fall 3.6% after cutting its 2026 capital expenditure forecast to $20 billion. Meta Platforms Incorporated also experienced a share price drop of 2.7% after increasing its 2026 capital expenditure guidance to between $135 billion and $145 billion to fund AI expansion. International Business Machines Corporation shares plunged 16.5% despite beating expectations, reflecting broader market concerns over debt-fueled AI infrastructure spending.
Simultaneously, geopolitical instability drove Brent crude oil prices above $110 per barrel. Houthi drone attacks targeted a Saudi Aramco oil facility and a Saudi airport, prompting the United States Department of State to order the departure of non-emergency personnel from Saudi Arabia. In response to the regional instability, President Donald Trump claimed the U.S. had decimated Iran and stopped its nuclear ambitions.
Financial volatility extended to Europe, where French 10-year bond yields reached a 24-year high amid social unrest and fiscal concerns. This triggered a flight to quality toward U.S. Treasuries and the Swiss franc. In the U.S., a resilient labor market was indicated by an unexpected decline in initial jobless claims to 194,000 for the week ended October 17.
