US technology stocks experienced significant declines recently, driven by investor anxiety over the profitability of large-scale investments in artificial intelligence. Over the past week, nearly $1 trillion was wiped from the Nasdaq’s market value, escalating to approximately $2 trillion in losses over the past month. This downturn reflects growing skepticism about whether tech giants can achieve adequate returns on their substantial AI spending.
The Nasdaq Composite dropped more than 3% and the S&P 500 fell over 1%, threatening to negate October’s market gains. The Dow Jones Industrial Average also saw losses, albeit to a lesser extent. Investors appear increasingly concerned about the capacity of major technology firms to convert their AI investments into profits, especially as the Nasdaq 100 has seen a 5.8% decline in October.
Intel’s shares fell nearly 30% after the company projected weaker-than-expected profits for the year’s final quarter, despite stronger quarterly earnings. Amazon’s stock also declined by 1.8% following reports of lower summer profits and unexpectedly high expenditures. Alphabet’s shares suffered a significant 12% drop, erasing about $500 billion from its market value, after revealing increased cash spending on AI.
Despite these setbacks, leading tech companies such as Meta, Alphabet, and Amazon continue to increase investment forecasts to enhance AI infrastructure and expand data-center capacity. However, investor confidence is waning, with doubts about whether these investments will yield sufficient returns and productivity improvements.
Nvidia shares also fell by 3.1%, adding further strain on the S&P 500. This decline mirrors broader concerns that elevated interest rates might hamper data center expansion and reduce demand for businesses benefiting from the AI surge.
The overall market decline underscores escalating uncertainty surrounding the returns on AI investments, despite optimistic projections for corporate earnings growth across the US economy.