Nasdaq faces $2 trillion wipeout in October as AI spending fears deepen

The Nasdaq 100 is projected to lose over $2 trillion in market value this October, driven by investor concerns over the rapid spending on artificial intelligence (AI) by major tech companies. The index has already dropped more than 5.8% so far in the month, with hyperscalers Meta Platforms, Alphabet, and Amazon.com increasing their AI spending forecasts as they strive to expand AI infrastructure. The potential loss equates to nearly the entire market value of SpaceX.

The intensified scrutiny of AI spending comes amid rising borrowing costs, which could make debt-funded investments more expensive and difficult to justify. Several megacap companies have been raising capital through bond sales to finance their AI initiatives, raising concerns about overreliance on borrowing. J.P. Morgan estimates that global AI capital expenditure will reach $5.5 trillion by 2030, with $900 billion spent in 2026 alone.

Despite the headwinds, some AI-focused companies have reported positive results. Microsoft and SpaceX have defied the trend, with Microsoft forecasting strong cloud growth and SpaceX breaking from the gloom with strong earnings. However, the broader AI sector remains under pressure, as investors question whether the spending will translate into sustainable returns.