AI Spending Fears Deepen Tech Selloff

U.S. technology stocks sold off sharply as investors questioned whether massive AI infrastructure spending would generate returns quickly enough; the Nasdaq fell about 6% in October, with major indexes dropping further Friday. Big Tech earnings showed strong cloud demand but also rising data-center costs, weak free cash flow and uneven revenue: Amazon missed expectations, reported negative free cash flow and more than $77 billion in quarterly capital expenditure, and reaffirmed roughly $220 billion in 2026 spending, while CEO Andy Jassy said investment would rise further in 2027. Alphabet and Amazon were among the hardest hit, and Intel plunged after a disappointing outlook; Meta’s planned $97.5 billion fundraising and supplier-backed investment in customers raised concerns about cash burn, borrowing and shareholder dilution. Investors increasingly sought evidence that AI spending can deliver durable revenue, margins and cash flow, and used put options and credit-default swaps to hedge potential losses. More hawkish Federal Reserve expectations, elevated oil prices, inflation concerns, slowing profit growth and higher financing costs added to market unease, despite examples of AI investment returns from Microsoft and SpaceX.