Steep bill for AI buildout punishes Meta, other tech favorites

The cost of expanding artificial intelligence (AI) infrastructure has led to a steep decline in shares of tech giants including Meta Platforms, Nvidia, and SpaceX. Meta Platforms reported a new class of shares to raise funds for AI spending, causing its stock to fall by 8%, its largest drop since July. The Nasdaq Composite was also on track for its largest decline in four months.

SpaceX and Nvidia each declined by 9% and 4%, respectively. The semiconductor index experienced its largest decline since July following a 10% plunge in shares of Lam Research, a semiconductor company. The pullback highlights concerns over the long-term project of AI expansion, with tech firms borrowing heavily over the past year.

Higher interest rates and the expectation of selling billions of dollars in stock to fund the next round of AI building put pressure on share prices by increasing the number of shares outstanding.