Tech-heavy Nasdaq falls 2.6 percent as debate rages over whether AI is a bubble.
Published On 23 Oct 2026
US tech stocks have dropped sharply amid market jitters over the sustainability of companies’ enormous capital investments in AI.
The Nasdaq Composite, which is dominated by tech firms linked to the AI boom, fell 2.6 percent on Thursday, its steepest fall since the index tumbled 4.2 percent on June 5.
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The broader S&P 500 slid 1.21 percent, the benchmark’s biggest drop since a 1.52 percent decline on July 29.
Apart from Apple, each of the “Magnificent 7”, which make up more than one-third of the overall market, saw substantial losses.
Meta dropped nearly 7 percent after it raised its projected capital spending for this year to $135bn to $145bn in its latest earnings report, even as the Facebook parent company’s net profit fell short of expectations.
Amazon fell 4.6 percent, while Nvidia dropped 4.4 percent.
Tesla and Alphabet both fell 3.1 percent, while Microsoft declined 2.2 percent.
Apple rose 1.2 percent.
The sell-off extended to other major tech players, including Intel and Advanced Micro Devices, both of which fell about 8 percent, and Broadcom, which slid 4.3 percent.
Rising oil prices since February, due to the fallout of the US-Israel war on Iran, added to the downbeat mood.
Brent crude futures rose 4 percent on Thursday and continued to climb on Friday morning, taking the international benchmark above $114.20 a barrel, its highest since May.
Stocks slip in Asian trading
Major stock markets in Asia opened lower on Friday, following the losses on Wall Street.
Japan’s benchmark Nikkei 225 fell more than 2 percent in morning trading before recovering some ground, while South Korea’s KOSPI dropped as much as 3.5 percent.
The Hang Seng Index in Hong Kong fell about 0.5 percent.
Jay Goldberg, a senior analyst at Seaport Research Partners in San Francisco, said the swings in the market appeared to be driven more by sentiment than underlying fundamentals.
“In short, nothing has changed. Investors have just decided to be afraid this week. Everyone I speak to points to a different cause for the downfall … It’s just a giant wall of worry,” Goldberg told Al Jazeera.
“There are legitimate concerns about the AI trade, but this level of shift in the markets is driven much more by investor sentiment than any tangible reason.”
US tech companies’ huge investments in AI have stoked intense debate about whether a market bubble is forming similar to the one that preceded the 2000 dot-com crash.
While some Wall Street analysts view current levels of investment in datacentres and graphics processing units as unsustainable, others argue that AI will revolutionise society to a degree that justifies the eye-watering sums involved.
Global AI investment is forecast to reach $2.7 trillion in 2026 and $3.6 trillion in 2027, according to technology insights company Gartner.