Nasdaq slides 2.9% as AI spending worries trigger tech sell‑off

Market tumble on Friday The Nasdaq Composite slipped 2.86% to close at 25,437, marking its steepest single‑day percentage drop since June 5. The broader market followed suit, with the S&P 500 down 1.82% at 7,580.07 and the Dow Jones Industrial Average slipping 1.09% to 51,770.31. The Nasdaq is now 7.8% below its October 6 record high.

AI spending spree meets investor scepticism Big‑tech firms are committing more than $700 bn this year to data‑centres, chips and other AI infrastructure. While the spending reflects a race to dominate generative‑AI capabilities, markets are looking for evidence that the outlays will translate into earnings. The uncertainty intensified after Amazon missed earnings expectations and signalled even more aggressive AI investment, and after Intel issued a bleak outlook that knocked its stock down 28.6%.

Tech and semiconductor stocks bear the brunt Following Intel’s warning, other chip makers fell sharply: Nvidia –4.2%, AMD –10.9% and Micron –5.3%. The semiconductor index dropped 7.2% for the day, extending a monthly decline of over 15%. Hardware suppliers tied to AI data‑centre growth also suffered, with Dell down 10.8%, HP down 9.6% and cloud‑specialist CoreWeave losing nearly 10%.

Financing the AI boom becomes a pressure point A Financial Times report cited Blackstone saying AI start‑up Anthropic may not secure an investment‑grade credit rating immediately after its planned IPO, likely landing in the double‑B range and facing higher borrowing costs. Anthropic aims to spend more than $800 bn on computing infrastructure through 2045. Meanwhile, the $18 bn junior‑debt tranche of a chip‑financing deal received a double‑B‑plus rating from Kroll and a double‑B from Morningstar DBRS.

Meta, Amazon and Alphabet have already issued hundreds of billions of dollars in bonds to fund AI projects, and Microsoft is reportedly preparing a $25 bn investment‑grade bond sale – its first such issuance in over nine years. Meta’s announced $97.5 bn fundraise has also drawn attention to potential shareholder dilution.

Broader market ripple effects The tech sell‑off coincided with a sharp fall in cryptocurrency‑linked stocks after Binance disclosed a $6.3 bn security breach, dragging down Coinbase, Strategy and Robinhood by 7‑11%. Oil prices rose on geopolitical tension in the Strait of Hormuz, lifting Brent crude to $117.64 a barrel and WTI to $104.12. International markets mirrored U.S. weakness: South Korea’s Kospi fell 3.5% and Japan’s Nikkei slipped 2.1%, while Hong Kong’s Hang Seng rose modestly.

Outlook Despite the sell‑off, demand for data‑centre capacity remains robust. Amazon’s cloud business continues to accelerate, and early signs suggest Microsoft and SpaceX are beginning to reap returns from AI investments. Analysts at JPMorgan note that aggregate growth remains positive, even as investors await clearer profit signals from the AI spending surge.