Tech Stocks Slide and Oil Jumps as AI Spending Concerns Rise

Global markets slumped on Thursday, as a sharp sell-off in artificial intelligence stocks coincided with Brent crude oil prices climbing to their highest level since May, BNN Bloomberg reported. The tech-heavy Nasdaq composite tumbled 2.6 per cent to close at 26,008.86, marking its worst session since June, while the broader S&P 500 fell 1.2 per cent to 7,663.43.

Tech Sector Retreats as Borrowing Costs and Capex Spark Investor Anxiety

Artificial intelligence equities faced renewed downward pressure as investors reassessed the immense capital expenditure required to fund data center expansions and semiconductor procurement. Adam Crisafulli, head of Vital Knowledge, noted in a research note cited by CBS News that artificial intelligence growth remains heavily dependent on continuous capital outlays that dramatically outpace operating cash flow.

Nvidia dropped 4.4 per cent. Additional heavyweights suffered notable losses following quarterly financial disclosures. Meta Platforms lost 7 per cent despite reporting higher-than-expected revenue, as its profit fell short of analyst projections and management outlined plans for a new class of stock to fund future artificial intelligence outlays. Tesla slipped 3.1 per cent, with the electric vehicle company reporting stronger-than-expected summer profits but weaker revenue than analysts expected, while semiconductor equipment maker Lam Research slumped 11.8 per cent after issuing a current-quarter profit forecast below consensus estimates.

Neocloud provider CoreWeave dropped 10 per cent amid persistent concerns over elevated debt loads and credit default swap pricing. Addressing capital constraints in the sector, Nvidia CEO Jensen Huang told CNBC that while demand for neocloud infrastructure remains extremely high, capital scarcity is actively impeding broader industry expansion.

Tech Correction Triggers Declines in Asian and European Markets

The tech sector correction triggered steep declines across international exchanges during Thursday’s trading sessions. In Asia, South Korea’s Kospi tumbled 3.5 per cent, Hong Kong’s Hang Seng dropped 3 per cent, and Japan’s Nikkei 225 sank 2.7 per cent. European markets absorbed parallel pressures, with France’s CAC 40 index falling 1.4 per cent.

Geopolitical Tensions Drive Brent Crude to Five-Month Highs

Energy markets amplified macroeconomic anxieties on Thursday as international benchmark Brent crude futures rose 4 per cent to settle at $113.17 per barrel. West Texas Intermediate crude advanced 2.39 per cent to $99.47 per barrel. The upward movement followed reports of potential renewed security actions involving the United States and Iran following upcoming midterm elections, alongside statements from Washington regarding diplomatic standstills.

Amid the broader equity decline, investors reallocated capital into safer sovereign debt instruments. The benchmark U.S. 10-year Treasury yield dropped more than 17 basis points to close at 4.97 per cent, retreating to its lowest level in nearly a month as market participants sought shelter from the volatility in technology shares.

More on this story: Nasdaq sheds 2.14% in worst week since June as AI stocks pull back · US tech stocks fall amid valuation concerns and higher interest rates