US tech stocks tumble as investors fret over AI spending | Business and Economy News
Tech Stocks Slide as Concerns Over AI Investments Mount
October 23, 2026
U.S. technology stocks experienced significant declines on Thursday, as uncertainty grew regarding the sustainability of substantial capital investments in artificial intelligence (AI). The Nasdaq Composite, heavily populated by tech firms associated with the burgeoning AI sector, fell 2.6%, marking its steepest drop since a 4.2% decline on June 5.
The broader S&P 500 index decreased by 1.21%, the largest drop since a 1.52% fall on July 29. Notably, the “Magnificent 7″—seven tech giants that collectively account for over one-third of the overall market—saw considerable losses, with the exception of Apple, which gained 1.2%.
Meta Platforms experienced a nearly 7% decline after the company announced its projected capital expenditures for the year would rise to between $135 billion and $145 billion. This announcement followed earnings results that fell short of analyst expectations. Amazon and Nvidia saw declines of 4.6% and 4.4%, respectively. Tesla and Alphabet both dropped 3.1%, while Microsoft fell by 2.2%.
Further losses were observed in major tech firms such as Intel and Advanced Micro Devices, both down approximately 8%, and Broadcom, which decreased by 4.3%. Following these downturns, the Nasdaq sits about 5.8% below its all-time high reached on October 6.
Additionally, rising oil prices have contributed to the negative sentiment in the markets. Brent crude futures surged 4% on Thursday and continued to rise, exceeding $114.20 a barrel, the highest level since May. This increase can be attributed in part to the geopolitical tensions resulting from the ongoing conflict involving the U.S. and Israel’s relationship with Iran.
On Friday, Asian markets reflected Wall Street’s downturn, with major indices starting the day lower. Japan’s Nikkei 225 fell more than 2% during morning trading but later recovered. South Korea’s KOSPI dropped as much as 3.5%, while Hong Kong’s Hang Seng Index decreased by approximately 0.5%.
Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, indicated that the market fluctuations seem driven more by investor sentiment than by underlying financial fundamentals. “Nothing has changed fundamentally; investors have chosen to be cautious this week. There are various theories regarding the causes of the market’s decline, but it seems to reflect a pervasive ‘wall of worry,'” Goldberg said.
Concerns about AI investments have prompted discussions about the potential for a market bubble reminiscent of the dot-com crash in 2000. Some Wall Street analysts suggest that current investment levels in data centers and graphics processing units are unsustainable. However, others argue that the transformative potential of AI justifies these investments. According to technology insights company Gartner, global AI investment is projected to reach $2.7 trillion in 2026 and $3.6 trillion in 2027.
