Nasdaq posts biggest drop since June as US stock market reassesses sustainability of AI boom

BlockBeats news, October 23 — U.S. tech stocks fell sharply as investors grew increasingly concerned that soaring spending in the artificial intelligence sector may be unsustainable. The Nasdaq dropped 2.6% on Thursday, marking its largest single-day decline since June.

Meanwhile, the blue-chip Dow Jones Industrial Average rose 0.02%. Due to market concerns over massive AI investments by tech companies, several major AI-related stocks declined. Meta (META.O) fell 7% after disclosing that it will incur substantial additional spending commitments going forward. Although Meta's revenue grew significantly, its profit still fell short of Wall Street expectations. Investor and analyst Navellier said: "It all traces back to Meta. The problem now is that the market is selling indiscriminately, throwing out the good along with the bad."

Further exacerbating market concerns about AI spending, Nvidia's CEO said that AI lacks sufficient capital to support the growth of so-called "Neoclouds." These companies primarily provide digital infrastructure for major AI cloud computing firms such as Meta and Amazon.

Shares of SpaceX, Nvidia, and CoreWeave all declined. The Philadelphia Semiconductor Index plunged 6.7%. Given the continued turmoil in the AI sector this week, U.S. investors are turning to the bond market for safe haven, seeking to avoid riskier assets such as tech stocks. As capital flooded into the bond market, U.S. Treasury yields fell sharply.