Stocks sink, bonds leap as AI giants' spending spooks investors
Technology shares fell as investors worried that rising AI spending may not deliver sufficient returns. Alphabet lost 12.6% and about $500 billion in market value, while U.S. Treasury yields fell and Asian markets declined.
1. Tech shares slide
Alphabet shares fell 12.6% on Wall Street and slid further after hours, wiping out about $500 billion in market value as its AI spending turned cash flow negative. Intel shares plunged 23% after hours and Amazon shares fell 7%, driving Nasdaq 100 futures down 1.9% and weighing on Asian chipmakers.
2. Markets seek safety
South Korea's KOSPI fell more than 3%, while Japan's Nikkei dropped over 2%. U.S. 10-year Treasury yields fell more than 7 basis points to 4.91%, putting them about 37 basis points lower for October, their largest monthly drop since December 2023.
3. Investors question returns
Investors worried that the AI infrastructure race is straining companies and that rising prices for devices such as smartphones and PCs may affect demand. Pepperstone analyst Chris Weston said investors were increasingly questioning whether shareholders would earn an adequate return on the capital being deployed.
