Global stocks slumped, with significant drops in megacap technology companies, as concerns mounted over the substantial capital expenditure required for artificial intelligence infrastructure and the sustainability of the recent AI-driven market surge. The Nasdaq Composite fell 1.3%, driven by losses in companies like Alphabet, Amazon.com Inc., Microsoft, and Meta Platforms, with Alphabet alone poised to erase over $256 billion in market capitalization. SpaceX, a key player in the AI infrastructure space, saw a 16% decline, reaching its lowest point since its market debut, as it announced a bond offering to fund its AI ambitions. This downturn follows what some analysts describe as a "broader sector pullback on ongoing anxiety over tech companies' massive capital spend on the AI infrastructure."
Investor sentiment was further impacted by the departure of Google DeepMind Vice President John Jumper, a Nobel laureate in chemistry for his AI work, who is moving to AI startup Anthropic PBC. This high-profile exit added to concerns about the stability and talent drain within major AI players. Moreover, the selloff spread to Asian chipmakers like SK Hynix Inc. and Samsung Electronics Co., which slumped over 10%, indicating a broader global apprehension regarding technology valuations and the AI boom.
Despite the tech selloff, some sectors saw gains. Memory chipmaker Micron Technology Inc. climbed 5.8% and hit record highs after announcing a strategic agreement with Anthropic to scale next-generation AI infrastructure, positioning itself as a beneficiary of AI spending. Similarly, stocks in the data storage sector, including SanDisk and Western Digital, also performed well. Brent crude oil prices retreated to under $78 per barrel, influenced by ongoing peace talks between the US and Iran, with Vice President JD Vance indicating a "very, very good" first round of negotiations that included Iran agreeing to allow nuclear inspectors back into the country and the US issuing a 60-day license for Iran to sell oil internationally.
