Tech stocks slide as investor skepticism over AI infrastructure spending intensifies

OPA WIRE, Oct 30 (OPA) — Technology stocks experienced a broad retreat on Friday, extending losses from the previous session as market sentiment shifted against the AI-driven rally. The Nasdaq index, which fell 1.4 percent on Thursday, faced further pressure with projections of an additional 2 percent decline. The downturn follows a series of bleak quarterly results from major U.S. technology firms, prompting a reassessment of valuations that had reached record highs earlier this year.

Intel shares were set to open approximately 25 percent lower, potentially erasing £90 billion in market capitalization, while Amazon faced a projected 7 percent slump. Alphabet, the parent company of Google, saw its value drop by more than 12 percent on Thursday, contributing to a 30 percent decline from its May peak. Analysts have characterized the movement as a correction, noting that several high-profile tech stocks have entered bear market territory, defined as a decline of more than 20 percent from recent highs.

Market strategists point to a growing disconnect between the billions of dollars allocated to AI infrastructure, such as data centers, and the lack of immediate, tangible returns. Neil Wilson, an investor strategist at Saxo, noted that the sell-off appears indiscriminate, reflecting investor impatience for profitability. The reliance on debt-funded spending has become a point of contention as rising borrowing costs make the justification for high capital expenditure more difficult for corporate leadership.

While U.S. markets grapple with the tech slump, the London-based FTSE 100 index remained resilient, edging up 0.2 percent to 10,744. The index's limited exposure to pure-play technology stocks, combined with strong performances from sectors like pharmaceuticals and energy, provided a buffer against the global volatility. Despite the turbulence, the market remains focused on whether the current AI infrastructure build-out will eventually yield the productivity gains necessary to sustain current valuations.