Wall Street retreats after mixed results from Meta and Tesla, while Asian technology shares tumble and investors reassess the costs and returns of artificial intelligence investments
Global equity markets came under renewed pressure on Thursday as technology stocks resumed their decline following mixed earnings reports from major US companies, while rising oil prices and geopolitical tensions further weakened investor sentiment.
Artificial intelligence-linked stocks remained volatile as investors questioned the sustainability of massive AI investments, the timeline for generating returns and the growing cost of financing expansion. The concerns have intensified since technology shares reached record highs in June, prompting markets to reassess valuations and the profitability prospects of the sector.
A strong quarterly report from SpaceX, marking its first results since its June listing, had initially lifted investor optimism and helped push all three major Wall Street indexes higher on Wednesday. However, subsequent earnings announcements from Meta Platforms and Tesla reignited concerns about corporate spending and the outlook for technology stocks.
“Risk-off sentiment is returning amid high geopolitical tensions and a swirl of worries about financing the AI juggernaut,” said Susannah Streeter, chief investment strategist at Wealth Club.
Tesla reported lower profits for the July–September quarter and reduced its capital expenditure forecast for the year, while Meta, the parent company of Facebook, raised its estimates for artificial intelligence spending.
Tesla shares fell 1.3% at the start of trading in New York, while Meta shares dropped 6.7%. The technology-heavy Nasdaq Composite declined 1.3%, reflecting renewed pressure on growth-oriented stocks.
AI Spending and Financing Costs Under Scrutiny
The latest earnings reports have highlighted the dilemma facing investors as technology companies accelerate their AI investments. Markets have shown concern both when companies increase spending without clear evidence of near-term returns and when they scale back investment, potentially signalling weaker growth prospects.
Chris Weston, head of research at Pepperstone, said Meta’s results reinforced the scale of the AI investment cycle but highlighted the growing importance of how that spending is financed.
Investors, he noted, are increasingly focused not only on revenue growth and the ability to monetise AI technologies, but also on financing strategies and their implications for existing shareholders.
David Morrison, an analyst at Trade Nation, described the market reaction to the companies’ results as concerning, arguing that upward momentum had weakened and that important technical support levels were coming under pressure.
Attention is now turning to upcoming earnings reports from Microsoft, Amazon and Alphabet next week, followed by Apple and Nvidia in November. Their results are expected to provide further insight into corporate AI spending, demand for advanced computing infrastructure and the sector’s earnings outlook.
Asian Technology Shares Lead Regional Declines
Technology stocks also weighed heavily on Asian markets, with semiconductor manufacturers and major internet companies recording significant losses.
South Korean chipmakers SK Hynix and Samsung Electronics fell 5.5% and 4%, respectively, while Japan’s Kioxia and Tokyo Electron lost as much as 7%.
The declines pushed South Korea’s Kospi index down more than 3%, while Japan’s Nikkei 225 dropped 2.7%.
Hong Kong’s market also fell more than 3%, with NetEase and Tencent among the companies facing selling pressure. Chinese e-commerce giants Alibaba and JD.com were additionally affected by government calls for tighter quality standards.
The broad retreat reflected concerns about technology valuations and the durability of AI-related investment momentum, particularly across Asian markets with significant exposure to the semiconductor supply chain.
European Markets Fall Amid Economic and Corporate Concerns
European equities also traded lower in afternoon dealings, although the region’s markets have comparatively less exposure to major technology companies.
Paris’s CAC 40 declined 1%, pressured by concerns about France’s high government debt and recent violent street protests.
Luxury group Hermès led losses in Paris, with its shares falling 5.5% after quarterly sales came in below market expectations.
In the banking sector, Barclays slipped 0.5%. The British lender reported higher profits but also announced plans to cut approximately 5,000 jobs by the end of the year, as artificial intelligence increasingly takes over certain support functions.
The latest market movements underscore growing investor sensitivity to corporate spending, financing costs and earnings visibility. With major technology companies preparing to report results, markets are likely to remain focused on whether the expected returns from AI investments can justify the substantial capital commitments involved.
