Nasdaq set to confirm correction as AI spending worries mount
QQQ•The Nasdaq Composite fell nearly 4% to 24,712.60, more than 10% below its October 6 record close of 27,599.89, putting it on track to confirm its second correction this year. Investors are questioning the returns on planned AI infrastructure spending.
1. Nasdaq approaches correction
The Nasdaq Composite fell nearly 4% on Thursday to 24,712.60, more than 10% below its record closing high of 27,599.89 reached on October 6. A decline of 10% from a recent record closing high is widely considered a correction; this would be the Nasdaq's second correction this year.
2. AI spending concerns
Worries about massive AI spending and scrutiny of data-center expansion rattled technology stocks. The Nasdaq lost more than $2.5 trillion in market value in October, while investors questioned how quickly planned investments in data centers, chips and other AI infrastructure would produce profits.
3. Policy and earnings weigh
The decline erased the previous session's gains as investors weighed the prospect of greater scrutiny of AI infrastructure following Democrats' sweep of both houses of Congress. Alphabet and Meta earnings last month failed to reassure investors about returns on AI spending. Persistent geopolitical tensions in the Middle East and fears of prolonged inflation have also kept borrowing costs elevated.
