Stocks slump, bonds leap as AI giants' spending spooks investors
SPY•Asian tech shares fell and bonds rallied as investors worried that heavy AI spending may not deliver adequate returns. Alphabet lost 12.6% on Wall Street, erasing $500 billion in market value, while South Korea's KOSPI dropped 5%.
1. AI spending rattles stocks
Tech shares slumped in Asia on Friday as investors questioned whether massive AI investments would generate adequate returns. Alphabet shares fell 12.6% on Wall Street and slipped further after hours, wiping out $500 billion in market value as its AI spending turned cash flow negative. Intel fell 23% after hours and Amazon shares dropped 7%, sending Nasdaq 100 futures down 1.4%.
2. Asian markets fall
South Korea's KOSPI fell 5%, taking its October decline to more than 17%, while Japan's Nikkei lost 3%. China's CSI300 headed for its largest monthly fall in a decade amid concerns that weaker demand for chips and data centre equipment could hurt revenues.
3. Bonds rally, yields drop
US Treasury yields fell, with the 10-year yield down more than 7 basis points in Tokyo trading to 4.91%; it was on track for a 37-basis-point monthly decline, its largest since December 2023. Investors also moved toward haven currencies, while the Bank of Japan was expected to hold rates later Friday.
