Nasdaq Slumps Under Weight of AI Spending Fears
The Nasdaq Composite index took a hit in recent trading sessions due to concerns over AI spending. Alphabet's earnings report was the main catalyst, as the company raised its 2026 capital expenditure guidance to $195B-$205B, up from a previous estimate of $180B-$195B.
Tesla also contributed to the worries with its own elevated AI spending plans. The combined effect has led to a projected $500B-$700B in AI-related capex for 2026, with some estimates already exceeding $527B, up from $465B just months prior.
The result is a persistent ceiling on tech valuations, with chipmakers and mega-cap names absorbing the brunt of the rotations. Investors are now looking for signs that these companies can pair their capex announcements with revenue growth to justify the spending.
The AI capex concerns also spilled over into the cryptocurrency market, with Bitcoin falling 1.8% to around $64,800 and Ether dropping about 3% to near $1,870.