United States technology equities suffered significant losses on Thursday driven by investor jitters surrounding the sustainability of corporate capital expenditure on artificial intelligence. The Nasdaq Composite dropped 2.6 percent, recording its steepest decline since June 5 when the index fell 4.2 percent.
The broader S&P 500 index slid 1.21 percent, marking its largest single-day drop since July 29. Nearly all of the prominent market grouping known as the Magnificent Seven experienced substantial declines, with only Apple avoiding the downward trend.
Meta shares dropped nearly 7 percent following the release of its latest earnings report. The Facebook parent company raised its projected capital spending for the year to between $135bn and $145bn while simultaneously missing net profit expectations.
Other major firms within the sector also recorded losses. Amazon shares fell 4.6 percent, Nvidia dropped 4.4 percent, Tesla and Alphabet both declined 3.1 percent, and Microsoft fell 2.2 percent.
The sell-off affected wider technology players. Intel and Advanced Micro Devices both dropped approximately 8 percent, while Broadcom slid 4.3 percent.
Following the session, the Nasdaq sat roughly 5.8 percent below its all-time high achieved on October 6. Market sentiment faced pressure from rising oil prices linked to the fallout of the US-Israel war on Iran.
Brent crude futures rose 4 percent on Thursday and continued climbing on Friday morning to surpass $114.20 a barrel, reaching its highest level since May.
Asian stock markets opened lower on Friday following the Wall Street downturn. Japan’s Nikkei 225 fell more than 2 percent in morning trading before regaining some ground, South Korea’s KOSPI dropped up to 3.5 percent, and Hong Kong’s Hang Seng Index fell about 0.5 percent.
Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, said the market swings stemmed largely from sentiment rather than foundational economics. Goldberg noted that nothing fundamental had changed and that investors had simply decided to feel fearful.
Intense debate continues across Wall Street regarding whether massive corporate investments in datacentres and graphics processing units point toward a bubble comparable to the 2000 dot-com crash. While certain analysts view current spending levels as unsustainable, others contend that artificial intelligence will transform society enough to justify the costs.
Global technology insights company Gartner forecasts that worldwide artificial intelligence investment will reach $2.7 trillion in 2026 before climbing to $3.6 trillion in 2027.
