US technology equities experienced a sharp retreat on Thursday as investors questioned the durability of massive AI-related capital outlays. The Nasdaq Composite slipped 2.6 percent, marking its steepest decline since a 4.2-percent plunge on June 5. The broader S&P 500 fell 1.2 percent, its biggest one-day loss since a 1.5-percent dip on July 29. The tumble underscored heightened anxiety over spending levels in the sector.
All but Apple among the so-called “Magnificent 7” recorded sizable declines, amplifying the market’s nervousness. Meta’s shares slid nearly 7 percent after the company lifted its projected AI capital spending to a range of $135 billion-$145 billion for the year, even as its net profit fell short of expectations. Intel and Advanced Micro Devices each dropped about 8 percent, while Broadcom fell 4.3 percent, adding to the breadth of the sell-off.
Following the declines, the Nasdaq sits roughly 5.8 percent below the record level it set on October 6, reflecting the impact of the recent sell-off. Meanwhile, oil markets have added to the gloom, with Brent crude futures climbing 4 percent on Thursday and continuing upward on Friday, pushing the benchmark above $114.20 a barrel, the highest price since May. The rise traces back to heightened tensions after the US-Israel conflict with Iran that began in February.
Asian equity indices reacted unevenly to the US tech pullback. Japan’s Nikkei 225 fell more than 2 percent in early trading before recouping some losses to close 0.3 percent lower, indicating lingering concerns. In contrast, Hong Kong’s Hang Seng Index rose 0.7 percent after an earlier dip of about 0.5 percent, suggesting a more resilient regional sentiment despite the broader tech downturn.
Jay Goldberg, senior analyst at Seaport Research Partners in San Francisco, attributed the volatility primarily to market psychology rather than fundamental shifts. He told Al Jazeera, “In short, nothing has changed. Investors have just decided to be afraid this week. Everyone I speak to points to a different cause for the downfall … It’s just a giant wall of worry.” His assessment highlights the role of sentiment in amplifying price swings.
The episode has reignited debate over whether AI spending is creating a speculative bubble reminiscent of the 2000 dot-com crash. Some Wall Street analysts argue that current outlays for data centres and graphics-processing units exceed sustainable levels, while others contend that AI’s transformative potential justifies the large capital commitments. Gartner projects global AI investment to reach $2.7 trillion in 2026 and $3.6 trillion in 2027, underscoring the scale of the market.