Technology stocks faced a sharp sell-off on Wall Street this week as investors grew increasingly concerned that the massive investments in artificial intelligence (AI) infrastructure may not translate into higher profits quickly enough to justify elevated valuations.
Although earnings reports from major technology companies showed continued growth in cloud computing and AI-related businesses, investors focused on the mounting costs of building data centres, purchasing advanced chips and expanding computing infrastructure.
The concerns triggered heavy selling in technology shares on Friday, extending losses across major US stock market indices.
The Nasdaq 100 Index's October decline reached 6.7%, marking its worst monthly performance since March 2025, when markets were rattled by tariff-related uncertainty.
One of the biggest concerns among investors is the growing gap between technology companies' capital expenditure and the cash generated by their businesses.
Major cloud and technology companies, often referred to as hyperscalers, are spending billions of dollars on data centres, servers, networking equipment and other infrastructure required to support AI services.
While demand for cloud computing remains strong, investors increasingly want evidence that these investments will translate into…