Meta's AI spending surge triggers another selloff in US tech stocks, Wall Street questions whether the market can absorb the massive investment

Download the app

+1 Meta AI spending surges, US tech stocks sold off again, Wall Street asks whether the market can absorb the massive investment. The Paper reporter Hu Hanyan 2026-10-23 17:00 Source: The Paper ∙ 10% Company > Listen to full text Font size

Tech stocks led the decline as a new wave of turmoil swept the US stock market.

On local time October 22, the day after Tesla and Meta among the "Magnificent Seven" US tech giants released earnings, US tech stocks were once again hit by heavy selling. Among them, Meta's announced massive spending plan once again triggered market concerns over whether the debt-driven AI (artificial intelligence) infrastructure boom can be sustained, and prompted investors to flock to US Treasuries.

On the 22nd, Meta (Nasdaq: META) shares fell 6.98% to close at $648.85 per share, SpaceX (SPCX) fell 9.14% to close at $144.75 per share, and Tesla (TSLA) fell 3.08% to close at $374.58 per share. AI chip leader Nvidia fell 4.4%, chip giant Intel fell 8%, and data center provider CoreWeave fell more than 10%. The memory chip sector suffered a heavy blow, with the Philadelphia Semiconductor Index closing down 6.72%.

Factors such as rising international oil prices and pressure on the French government bond market intensified global risk aversion. As investors rushed to buy safe-haven assets, US Treasury yields fell sharply, with yields on 5-year to 30-year maturities all hitting their lowest levels in nearly a month, and the 10-year yield falling below 5% for the first time in nearly a month.

Jon Hill, head of US inflation strategy at Barclays, said: "Today's rally in the US Treasury market is not a reflection of any recent fundamental data, but is entirely related to possible cracks in the AI trade."

Although Meta's third-quarter revenue exceeded expectations and the company said it is actively promoting the commercialization of its AI assistant Muse, the company continued to raise the lower bound of its full-year capital expenditure forecast, free cash flow turned negative for the first time, and total future spending commitments soared from about $700 billion in July this year to $825 billion. These negative factors caused its 5-year credit default swap quote to hit a record high.

At the same time, Meta has approved the establishment of a new non-voting Class C common stock, planned to take effect in January 2027. One of the reasons disclosed by the company for establishing it is to meet the huge investment needs under the background of AI transformation.

This is just the latest example of financing concerns spreading along the AI industry chain. Since hitting a record high in early October, US tech stocks have experienced violent fluctuations multiple times. The market is increasingly worried that tech companies are investing in debt-driven AI too quickly, yet still have to wait longer for profits.

Recently, several Wall Street heavyweights have publicly commented on this. For example, Ken Griffin, founder of Citadel, the world's top hedge fund, said the current AI boom has "almost certainly" formed a capital bubble. BlackRock CEO Larry Fink warned that delays in data center construction could push up computing costs and threaten economic growth.

Meanwhile, Blackstone President Jon Gray said there is no need to worry because demand is "growing almost parabolically." Howard Marks, co-chairman of Oaktree Capital, also believes the market has not reached a true bubble state.

In addition, South Korean chipmaker SK Hynix said on the 22nd that it will no longer proceed with the US initial public offering (IPO) plan of its subsidiary Solidigm, which engages in the design and manufacture of memory hardware. This decision was made "in consideration of recent capital market conditions and stock price trends," and not because of changes in the subsidiary's operating performance.

Peter Tchir, head of macro strategy at Academy Securities, said: "Ultimately, it all comes down to the AI story, in every aspect. Can the market really absorb all this AI spending?"

The Guardian's analysis pointed out that although tech companies' revenue continued to grow in the latest earnings reports, investors still worry that after years of frenzied pursuit of AI, related concept stocks are already overpriced. For example, Lam Research (LRCX), which provides equipment and services for semiconductor manufacturing, reported profit and revenue growth for the last quarter that were both higher than analyst expectations, yet its stock price fell 11.8%.

At the same time, pressure on emerging cloud service providers such as CoreWeave and Nebius has been further amplified. Such companies are at the core of AI infrastructure construction and are more vulnerable than tech giants.

BofA analyst Tal Liani said he maintains a "Buy" rating on CoreWeave shares with a target price of $140. However, to fulfill commitments to customers, CoreWeave will need to raise $20 billion. And this financing need is one of the factors making tech stock investors anxious.

Matthew Maley, chief market strategist at financial institution Miller Tabak, said the starting point of this round of selling was the key question of "whether all AI spending can bring investment returns": "It is becoming increasingly clear that this will take longer."

Maley concluded: "No one is worried that Meta, Amazon or Google will be unable to obtain the financing they need. But if financing costs become so high that smaller companies find them hard to bear, that alone is enough to make the market uneasy, even if the entire industry does not collapse."

Next week, Microsoft, Google and Amazon among the "Magnificent Seven" US tech giants will successively release earnings, and Apple will also report results in early November. As more tech giants deliver their scorecards, the market will further scrutinize the scale and returns of AI investment. Responsible editor: Zheng Jingxin Image editor: Shen Ke Proofreader: Zhang Liangliang The Paper tip-off: 021-962866 The Paper, unauthorized reproduction prohibited +1 Favorite I want to report #AI #ArtificialIntelligence View more