Nasdaq 100 faces over $2 trillion loss as AI spending raises investor concerns
The tech-heavy Nasdaq 100 could lose more than $2 trillion in market value this month amid heightened scrutiny of AI investment returns and rising borrowing costs.
The Nasdaq 100 is on track to shed more than $2 trillion in market value in October, as investors question whether the billions being poured into artificial-intelligence projects will generate returns quickly enough. The unease has been amplified by rising borrowing costs that make debt-funded spending more expensive.
Alphabet recorded its largest one-day percentage drop after weaker-than-expected search-advertising results and a sharp increase in cash burn. Meta’s plan to raise a record $97.5 billion has sparked worries about shareholder dilution and the possibility that growing AI outlays could force other large tech firms to tap capital markets more aggressively.
"It may be that we've overestimated how strong the growth might be, but they're not going negative in aggregate," said John Bilton, global head of strategic research, multi-asset solutions at JPMorgan Asset Management.
Microsoft is reportedly preparing a $25 billion bond sale, its first U.S. investment-grade issue in more than nine years. Over the past four years, Meta, Amazon and Alphabet have each issued hundreds of billions of dollars in bonds, prompting concerns about dependence on debt financing. Morgan Stanley projects overall AI infrastructure spending to exceed $1 trillion next year.
Investors are also beginning to price in credit-market risks, as higher financing costs and slower AI-spending payoffs could pressure companies previously seen as insulated from macroeconomic shocks.
Despite the concerns, revenue among the “Magnificent Seven” has stayed robust since the launch of ChatGPT in 2022, with Amazon Web Services, Meta and Microsoft all reporting strong growth and optimistic outlooks.
J.P. Morgan expects global AI capital expenditure to reach $5.5 trillion by 2030, including about $900 billion in 2026 alone. Analysts note that this year’s AI spending by Amazon, Alphabet, Meta, Oracle and Microsoft could equal the total they have invested since ChatGPT’s debut.
The story has been updated to correct John Bilton’s title.