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Nasdaq set to confirm correction as AI spending worries mount
The Nasdaq fell nearly 4 per cent on Thursday, putting it more than 10 per cent below its record close and on course to confirm a correction. The decline reflects growing investor concern over the scale of technology companies’ AI investments and whether expanding data-centre infrastructure will deliver adequate returns.
The index stood at 24,712.60, against a record closing high of 27,599.89 on 6 October; a fall of 10 per cent from a recent high is widely treated as a correction. It would be the Nasdaq’s second correction this year, after AI-linked stocks lost more than $2.5 trillion in market value during October. Investors are also weighing elevated borrowing costs, geopolitical tensions and inflation, while recent results from Alphabet and Meta did little to ease doubts about returns from AI spending.
In short
- Nasdaq fell nearly 4 per cent, crossing the 10 per cent correction threshold.
- AI-linked stocks lost over $2.5 trillion in market value in October.
- Investors question whether heavy AI investment will generate sufficient returns.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Investors may reasonably see the sell-off as a reassessment of whether technology companies’ large AI commitments can earn adequate returns, especially as borrowing costs remain high and inflation and geopolitical tensions add uncertainty. A correction could bring share prices closer to realistic expectations and encourage companies to show clearer evidence that data-centre investment is paying off.
The case against
The decline may overstate the risks of investments whose returns could take years to emerge, while treating early uncertainty as evidence that AI spending will fail. Building data-centre capacity now could help technology companies meet future demand and secure long-term advantages; short-term market volatility may therefore overlook the potential value these investments create.
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