Technology shares slide as AI spending concerns rattle markets

Wall Street ended lower on Thursday, with technology shares bearing the brunt of renewed scrutiny over the cost of artificial intelligence (AI) development. The S&P 500 shed 1.20%, the Nasdaq Composite dropped 2.90%, and the Dow Jones Industrial Average was little changed. Meta Platforms lost 7% despite stronger earnings and revenue, as its plans for increased AI investment intensified concerns about financing requirements and credit exposure. Selling also extended to other large technology companies ahead of their results next week, with Alphabet down 3.20%, Microsoft 2.20% lower and Amazon falling 4.60%. Tesla declined 3.10%, while semiconductor stocks suffered further losses. Lam Research slumped 11.80% following a weaker outlook, while Nvidia fell 4.40%, Micron dropped 6.30%, Advanced Micro Devices shed 8.10% and Intel lost 8%.

Elsewhere, Procter & Gamble rose 6% after its results exceeded estimates, and Spotify gained 10.70% after projecting better-than-expected 4Q26 profit. Higher oil prices and escalating Middle East tensions continued to raise concerns about inflation, while markets anticipated the possibility of another 25-basis-point Federal Reserve rate increase before year-end.

European equities also weakened, with the Stoxx 600 falling 1% and the Euro Stoxx 50 declining around 2%. Rising oil prices, geopolitical tensions and concerns about the returns from AI infrastructure spending weighed on sentiment. Germany’s DAX fell approximately 1.10% to 25 372, while France’s CAC 40 declined 1.40% to 7 811. Technology, banking and industrial shares came under pressure, although SAP gained after raising its full-year outlook. In the UK, the FTSE 100 recorded smaller losses than its continental peers, as gains in pharmaceutical and consumer stocks partly offset weakness in banks and mining shares.

Asian markets were broadly lower as concerns about AI investment returns spread across technology shares. Japan’s Nikkei 225 fell 2.65% to 62 908, with SoftBank Group, Tokyo Electron and other technology-related stocks among the notable decliners. China’s Shanghai Composite lost 1.50% to 3 658, while Hong Kong’s Hang Seng Index dropped around 3%, extending the region’s technology-led sell-off. Weakness in Chinese technology shares and heightened geopolitical tensions added to pressure on sentiment.

South African equities also ended lower. The JSE All Share Index declined 1.03% to 108 525.49, while the Top 40 fell 1.18%. Resources lost 3.18% and Metals and Mining declined 3.81%, while financials slipped 0.23%. Industrials edged up 0.05%. The rand weakened against the major currencies, with the US dollar rising 0.79% to R16.50, the pound gaining 0.85% to R22.12 and the euro advancing 0.69% to R18.52.

At 19h25 SAST, Brent crude rose 3.34% to US$112.45 a barrel amid concerns about escalating Middle East tensions. At 20h19 SAST, gold fell 2.42% to US$4 040.21 an ounce, silver declined 5.26% to US$54.92 and platinum lost 3.56% to US$1 577.65.