U.S. stocks closed mostly lower on Thursday, as massive capital expenditure and financing pressures in the artificial intelligence (AI) sector once again triggered investor concerns, leading to a large-scale selloff in technology stocks.
Meanwhile, rising geopolitical tensions in the Middle East pushed international oil prices sharply higher, while safe-haven capital flowed into U.S. Treasuries, driving yields significantly lower.
By the close, the Nasdaq Composite fell 2.6% to 26,008.86 points, marking its largest single-day decline since June. The S&P 500 dropped 1.21% to 7,663.43 points, its worst single-day performance since July. The Dow Jones Industrial Average edged up 11.89 points, or 0.02%, to 52,867.98 points.
Technology stocks became the main drag on the market that day. Meta Platforms Inc (META.US) shares fell about 7%. Although the company's latest quarterly revenue beat market expectations and it issued optimistic guidance, its massive AI investment needs continued to unsettle investors. Other tech stocks also came under pressure. Advanced Micro Devices Inc (AMD.US) dropped more than 8%, Micron Technology Inc (MU.US) fell 6%, and NVIDIA Corp (NVDA.US) declined 4%. AI cloud infrastructure provider CoreWeave Inc (CRWV.US) saw its shares drop 10%. Previously, the company's bond yields and credit default swap (CDS) prices remained elevated, highlighting investor concerns about its debt burden and financing capacity.
Notably, NVIDIA CEO Jensen Huang said in an interview on Thursday that demand for new cloud computing service providers is extremely strong, but capital shortages are limiting the pace of expansion for related companies. Wells Fargo traders noted in a report that Huang's remarks about capital scarcity made the market uneasy, once again sparking concerns about the credit market's risk tolerance and whether financing channels are becoming saturated. The bank also said that Meta's comments about AI development requiring substantial financial support similarly intensified market worries about the scale of tech companies' capital expenditure, weighing not only on its own stock price but also on the broader market.
JPMorgan traders pointed out that the relatively optimistic sentiment on Wednesday reversed overnight. Meta's stock weakened in pre-market trading, combined with increased discussion about a potential further escalation of the Iran situation after the U.S. midterm elections, which together dented investor confidence. The bank said that judging from market price movements and trading desk feedback, the market narrative around AI financing remains very fragile. After the recent correction in tech stocks, investors have not yet regained sufficient confidence, nor do they have the willingness to significantly increase risk exposure again.
Meanwhile, rising geopolitical risks in the Middle East drove international crude oil prices sharply higher. According to media reports citing informed sources, the United States and Israel plan to launch a new round of strikes against Iran after next month's U.S. midterm elections. U.S. President Trump told reporters on Wednesday evening that Washington is not currently negotiating with Tehran and said certain things will happen "soon." The news intensified market fears of further escalation of conflict in the Middle East and potential disruptions to global crude oil supply. By Thursday's close, international benchmark Brent crude futures rose 4% to $113.17 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 2.39% to $99.47 per barrel.
Under the dual impact of declining tech stocks and rising geopolitical risks, investors accelerated their shift toward safe-haven assets such as U.S. Treasuries, driving Treasury prices higher and yields sharply lower. The 10-year U.S. Treasury yield fell more than 17 basis points to 4.972%, the lowest level in nearly a month. The 2-year Treasury yield, which is more sensitive to monetary policy expectations, also dropped more than 16 basis points to 4.659%.
Overall, Thursday's market movements reflected a shift in the focus of investors' attention regarding the AI investment boom. Although demand for AI computing power remains strong, the financing capacity, cost of capital, and corporate cash flow needed to support large-scale infrastructure buildout are becoming important factors affecting tech stock valuations. At the same time, uncertainty surrounding the geopolitical situation in the Middle East further exacerbated market volatility. Against the backdrop of intertwined AI financing concerns and geopolitical risks, investor risk appetite has clearly cooled, the U.S. tech sector is under considerable selling pressure, and crude oil and U.S. Treasuries have become the main directions for capital reallocation.
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