US Tech Stocks Plunge on October's Last Trading Day Amid AI Spending Fears
U.S. tech stocks experienced a massive sell-off on the final trading day of October, with the Nasdaq recording its largest single-day drop since June. Major names like Intel and Reddit saw their shares plummet by nearly 29%, driven by growing investor anxiety over heavy AI infrastructure spending. This downturn reflects a shifting investor sentiment as markets begin to scrutinize whether massive tech capital expenditures on AI will yield profitable returns. It signals a broader risk-off environment that extends beyond tech equities to commodities and financial assets. The Nasdaq 100 fell 3.5%, moving close to a 10% correction from its recent highs, while companies like Microsoft, Meta, Amazon, and Alphabet saw further declines. Capital expenditures by these four hyperscalers now account for over a third of the total capex of S&P 500 components, increasingly relying on external financing.
## BACKGROUND
Hyper-scale tech companies have been aggressively investing billions of dollars into data centers and hardware required to power generative artificial intelligence models. This unprecedented spending spree has previously driven massive stock market gains, but it has recently sparked concerns over sustainability and long-term monetization.