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Nasdaq faces $2 trillion wipeout in October as AI spending fears deepen
Reuters • • business
Key Points:
- The Nasdaq 100 is expected to lose over $2 trillion in market value this month as investor concerns grow over Big Tech's heavy investments in artificial intelligence and the uncertain timing of returns.
- Rising borrowing costs are making debt-funded AI investments more expensive, with companies like Microsoft, Meta, Amazon, and Alphabet issuing large bond sales, raising fears of overreliance on debt financing.
- Despite strong revenue growth from major tech firms such as Amazon Web Services, Meta, and Microsoft, investors worry that escalating AI capital expenditures may not yield quick enough returns to justify the spending.
- J.P. Morgan projects global AI capital expenditure to reach $5.5 trillion by 2030, with nearly $900 billion expected in 2026 alone, highlighting the massive scale of investment in AI infrastructure.
- The growing debt load and slower-than-expected returns on AI spending are causing increased risk perceptions in both equity and credit markets, challenging the notion that Big Tech is insulated from macroeconomic pressures.
