A global sell-off in AI-related stocks extended into the new week after the Nasdaq suffered its worst month in over a year, with major tech firms hit by investor concerns over profitability and the sustainability of the sector’s rapid growth.
The Nasdaq index, home to many technology stocks, fell 3.5 percent last Friday and briefly dipped 10 percent below its early October peak, a correction by Wall Street standards. Shares in Alphabet, Google’s parent company, plunged 11.8 percent on Thursday after its third-quarter results showed weaker growth than expected and cash outflows of over $51 billion due to AI investments, marking its worst day since going public over two decades ago . Intel and other chipmakers also saw sharp declines after disappointing earnings forecasts.
The broader AI sector, which includes chip designers like NVIDIA, developers such as Microsoft, and data center operators, has seen stock prices soar on expectations of an AI-driven future. However, recent setbacks have exposed vulnerabilities: rising borrowing costs for data center expansion, public resistance to new facilities, and the high operational expenses of AI adoption for businesses . OpenAI and Anthropic, two leading AI firms yet to turn a profit, face additional pressure as they prepare for public listings. OpenAI has delayed its IPO until early next year, while Anthropic’s prospectus received a “junk” credit rating, limiting future institutional funding .
The sell-off eased slightly on Monday, with US tech stocks poised to open higher after the bruising rout . Yet the sector remains under scrutiny as investors reassess the balance between AI’s promise and its costs.
