One opening-market account put the loss in US technology stocks at $1.3 trillion in 30 minutes. The Financial Times called it tech’s biggest one-day drop since the Covid pandemic.
The fall brought a question about AI back into focus: will the revenue justify the spending companies still plan?
The Selloff Was Broad
Reuters reported that the Nasdaq Composite had its deepest one-day drop in 19 months and ended in a correction. Qualcomm, Micron, Tesla, Dell, Arm, Marvell Technology, and CrowdStrike were each listed as down 10%.
The election added a regulatory worry. Reuters tied the chip selloff to fears of tougher AI rules after Democrats won control of Congress.
Tesla and SpaceX faced their own concerns. CNBC reported that investors were considering possible Congressional probes and stricter regulation. The two companies had lost more than $420 billion in combined market value since Tuesday’s close.
Deutsche Bank analysts said tighter rules could delay SpaceX’s Texas computing projects and raise their cost. For a market already questioning AI spending, a possible delay adds to the concern about when that spending might pay off.
AI Spending Still Needs a Payoff
One market account said several Wall Street analysts expect the growth rate of capital spending to peak in 2027. That does not mean they expect spending to stop. Their view is about how quickly it grows.
The same account cited rising borrowing yields for AI cloud companies, including a 17% yield for CoreWeave. It also warned that data center delays could leave too little revenue to justify the spending.
The concern is straightforward. Companies are still making expensive AI plans. If the data centers take longer to arrive, the revenue meant to support that spending could fall short.
There was another reading of the selloff. Two commentators argued that AI demand remains strong and that forced selling may partly explain the drop. One expected the shock to pass soon.
An opinion writer was more cautious. Impressive AI results, the writer warned, will not prevent business and financial cycles from turning. Strong demand and a falling market can both be part of the story.
The AI Plans Are Moving Ahead
Meta introduced Muse with a free tier and monthly plans of $20 and $100. Meta says its personal agent can book appointments, fill out forms, and monitor home security camera feeds.
The company is under pressure to show returns on its AI investment. It also faces privacy and safety scrutiny. Meta recently agreed to pay nearly $17 billion to settle a lawsuit brought by state attorneys general, and similar lawsuits remain.
Qualcomm has set a much larger data center goal. Its CFO and COO targeted $15 billion in full-year 2029 data center revenue. He said Meta had committed to using Qualcomm CPUs and Amazon was a custom silicon customer.
One commentator described a move from $40 billion in revenue today to $60 billion in 2029, while expecting flat revenue growth next year. The longer-term target is large. The nearer test is whether growth picks up.
Reuters also reported doubts among potential investors about Anthropic’s timing. They questioned whether it could start its planned IPO roadshow next week in time for a November listing.
These plans have different timelines, but they return to the same spending question. The companies have laid out what they want to build or earn. The revenue still has to support the cost.
Other Spending and Market Questions
President Donald Trump renewed his call for lower interest rates. He threatened to stop trading with countries with which the US has a deficit unless the Fed cuts rates.
A week earlier, another figure said rate hikes could soon be considered as he sought to bring inflation back to the Fed’s 2% target. The two positions point in different directions.
Disney has a spending question of its own. One commentator put its capital expenditures at $8 billion, up from $4 billion and then $5 billion. He estimated $9 billion in free cash flow.
He said Disney plans to invest $6 billion a year for the next 10 years in parks, adventures, and streaming. He questioned whether returns would improve and viewed Netflix as the better bargain.
Elsewhere, Bloomberg reported that years of bets by major Wall Street banks, including JPMorgan and Goldman Sachs, are paying off in China after earlier setbacks.
One commentator argued that retirement inflows, foreign investment, and company buybacks have supported stocks. In his view, a crash could follow if those flows reverse alongside panic selling and a recession. He said he could not predict when.