Meta led a sharp US tech stock sell-off as its spending plans reignited concerns about the sustainability of the debt-fuelled AI infrastructure boom. Shares in Mark Zuckerberg's social media group tumbled 7 per cent after it forecast it would need to raise "hundreds of billions of dollars" over several years, starting as early as this autumn, to fund its bet on AI. The decline stripped about $124bn from Meta's market value.
The tech-heavy Nasdaq 100 slid 2.9 per cent, while the blue-chip S&P 500 dropped 1.2 per cent. US Treasuries rallied strongly amid a rush into haven assets, with ten-year yields falling 0.16 percentage points to just below 5 per cent. Jon Hill, head of US inflation strategy at Barclays, said the rally was "all to do with potential cracks in the AI trade" rather than any fundamental data.
US tech stocks have been volatile since hitting a record high in early October, as investors fret over whether the surge in AI stocks and heavy debt issuance to finance data centres and chips has gone too far. Meta warned in a filing that there was an "increasingly challenging environment for raising capital" as rivals such as Alphabet launch huge debt deals and AI companies including Anthropic and OpenAI plot massive initial public offerings following SpaceX's market debut.
Separately, OpenAI has cut its valuation target for its latest funding round after facing resistance to a $1.4tn price tag from some investors, as it pushes to raise $30bn before going public next year.
Source: Financial Times Companies · Summarized by HeadlinesBriefing