US tech stocks tumble as investors fret over AI spending

US technology shares fell sharply on Thursday as investors questioned whether the sector's heavy spending on artificial intelligence can be sustained. The sell-off hit the Nasdaq Composite particularly hard, with the index dropping 2.6 percent, while the broader S&P 500 fell 1.21 percent. The decline was led by some of the biggest names in the market, including Meta, Amazon, Nvidia, Tesla, Alphabet and Microsoft.

Meta was the weakest of the group, falling nearly 7 percent after it raised its projected capital spending for the year to between $135bn and $145bn in its latest earnings report. That came even as the company's net profit missed expectations, adding to investor concern about the scale of spending required to compete in AI. Amazon fell 4.6 percent, Nvidia dropped 4.4 percent, Tesla and Alphabet each lost 3.1 percent, and Microsoft declined 2.2 percent.

Intel and Advanced Micro Devices both fell about 8 percent, while Broadcom slid 4.3 percent. The Nasdaq's decline was its steepest since June 5, when the index fell 4.2 percent. The S&P 500's drop was its biggest since July 29, when it lost 1.52 percent.

The weakness was not limited to a few companies, but spread across a wider group of technology stocks tied to the AI boom. That breadth suggested the market was reacting to a broader reassessment of valuations and spending plans rather than a single company's results. The move matters because the technology sector has been one of the main drivers of US equity gains, and the largest firms now account for a substantial share of the market.

Debate over whether AI investment is creating a bubble has intensified as companies commit ever larger sums to data centres, chips and related infrastructure. The latest decline shows how quickly sentiment can shift when investors begin to question whether future returns will justify those outlays. The sell-off also came against a more cautious global backdrop.

Rising oil prices have added to market unease, with Brent crude futures climbing above $114.20 a barrel, their highest level since May. That has fed into broader concerns about inflation and risk appetite. In Asia, major markets opened lower on Friday after the Wall Street losses, with Japan's Nikkei 225 falling more than 2 percent in morning trade before recovering some ground and South Korea's KOSPI dropping as much as 3.5 percent.

Analysts said the scale of the move appeared to reflect sentiment as much as fundamentals. One senior market analyst said investors seemed to be reacting to a "giant wall of worry" and that concerns about the AI trade were real, even if the day's swings were driven largely by fear. What remains unclear is whether the decline marks a short-lived correction or the start of a broader reassessment of technology valuations.

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