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The Nasdaq 100 is heading towards a potential USD 2 trillion loss in market value this October as investors grow increasingly concerned about the rising cost of AI investments. Heavy spending by major technology companies, combined with uncertainty over future returns, has put pressure on technology stocks.
The index has declined more than 5.8% during October, with recent quarterly earnings adding to market uncertainty. Meta Platforms, Alphabet and Amazon have raised their spending forecasts as they compete to build data centers and expand their AI infrastructure. Investors are now questioning whether these investments will generate enough revenue to justify the growing costs.
Alphabet experienced its biggest one-day percentage decline on record after reporting weaker search advertising results and a sharp increase in cash spending. Meta also attracted attention after announcing plans for a record USD 97.5 billion fundraising effort. The move raised concerns about shareholder dilution and whether technology companies will need to depend more heavily on external funding to support their AI ambitions.
However, not every major technology company has faced the same reaction. Microsoft and SpaceX delivered results suggesting that investments in AI are beginning to generate business returns.
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The growing cost of AI infrastructure is also pushing technology companies towards debt markets. Microsoft is reportedly planning to raise around USD 25 billion through its first US investment-grade bond sale in more than nine years.
Meta, Amazon and Alphabet have also issued substantial amounts of debt over recent years. Higher borrowing costs could make future infrastructure expansion more expensive, particularly if revenue growth does not keep pace with investment. Morgan Stanley expects global capital spending on AI infrastructure to exceed USD 1 trillion next year.
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Despite the market decline, business demand remains strong across several major technology companies. Amazon Web Services continues to expand, while Meta and Microsoft have reported encouraging revenue and cloud growth.
J.P. Morgan estimates that global AI investment could reach USD 900 billion in 2026 and USD 5.5 trillion by 2030. The challenge for technology companies is turning this spending into sustainable profits. Upcoming earnings from Apple and Nvidia could give investors more clues about the direction of the AI market.