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

Over $2 trillion in market value could be wiped from the tech-heavy Nasdaq 100 in October as mounting concerns over artificial intelligence (AI) spending and its potential return on investment weigh on investor sentiment. The index has already fallen 5.8% this month, with hyperscalers Meta Platforms, Alphabet, and Amazon raising their AI spending forecasts amid intense scrutiny.

The prospect of ever-increasing AI outlays has unnerved investors, particularly as rising borrowing costs make debt-funded investments more expensive and harder to justify.

Alphabet experienced its biggest one-day percentage drop on record on Thursday after disappointing results in its core business of search advertising and a surge in cash burn. Meta's plans for a record $97.5 billion fund raise raised concerns about shareholder dilution, while Microsoft and SpaceX bucked the trend with results indicating that AI spending may be starting to pay off. JPMorgan Asset Management's John Bilton noted that there may have been overestimations regarding the growth potential of AI spending.

The tech sector's dependence on debt financing has emerged as a new risk for investors, with concerns about overreliance on capital markets for raising funds. Big Tech has historically invested heavily in infrastructure, but the AI boom has led to unprecedented levels of capital expenditure. JPMorgan expects global AI capex to reach $5.5 trillion by 2030, with $900 billion spent in 2026 alone.