Investor sentiment soured as AI spending accelerated, sending a wave of bond issuances across the tech giants. Meta’s record $97.5 billion fundraise, Alphabet’s recent debt sales, and Amazon’s multi‑hundred‑billion‑rupee bond rounds all fed into a narrative that cash‑rich companies are increasingly courting debt.
The Nasdaq 100’s 5.8% plunge in October translates to a $2 trillion hit in market value, the largest monthly erosion on record for the index. The fall was driven in part by a 30% drop in Intel’s stock, Japan’s worst single‑day slide since 1974, and a tepid response to Alphabet’s earnings, which saw its largest one‑day percentage decline.
Amid the turmoil, Microsoft announced plans to raise $25 billion through its first US investment‑grade bond sale in nine years, a move that signals confidence in AI‑driven revenue while acknowledging the funding pressure. Meanwhile, SpaceX’s earnings hinted that AI-related infrastructure is beginning to generate returns, lending a glimmer of optimism.
John Bilton, global head of strategic research at Multi‑Asset Solutions, warned that "we may have overestimated how strong the growth might be, but they're not negative in aggregate," underscoring the delicate balance between AI capital expenditure and profitability.
Looking ahead, analysts anticipate that the next quarterly earnings from the Magnificent Seven—Alphabet, Meta, Amazon, Microsoft, Apple, Nvidia, and Tesla—will test whether the AI spending spree can sustain higher margins or if the debt burden will begin to bite. Capital‑expenditure forecasts from Morgan Stanley predict AI infrastructure spending will exceed $5.5 trillion by 2030, adding a long‑term risk layer to the sector’s valuation.
The market will now watch for any signs that rising borrowing costs and slower AI returns could force these firms to slow spend, potentially tightening the valuation multiples that have driven the Nasdaq’s recent rally.